Impact of Government Borrowing on Financial Development (A case study of Pakistan)

Amjad Ali, Farooq Ahmed and Fazal- Ur- Rahman
Additional contact information
Farooq Ahmed: Department of Economics, University of the Punjab, Lahore, Pakistan
Fazal- Ur- Rahman: Department of Economics, University of the Punjab, Lahore, Pakistan

Bulletin of Business and Economics (BBE), 2016, vol. 5, issue 3, 135-143

Abstract: Private sector of any country plays important role in the economic development of the country. It not only provides employment to the people of the country but also goods and services according to the taste of the people. Private investment depends mainly on private borrowing which proves to be the blood for private sector. Private borrowing or credit to private sector is important part of the financial development which measures the financial depth of it. The aim of this paper therefore, is to investigate the impact of government borrowing from central bank and commercial banks on financial development. In this Paper, government borrowing is used as Public domestic debt while credit to private sector (Private borrowing) is used as financial development. Normally, it is frequently observed that when government borrows more from banks, then less amount left for the private borrowing so in this way volume of private investment declines and this is found in this study. There are some other factors which also affected the private borrowing like, taxes, savings and inflation. This study has been done by using time series data of Pakistan from 1972-2015. ARDL Methodology has been used to investigate the relationship of variables. The data resource has been taken from WDI and the reports of state bank of Pakistan as well as different issues of economic survey of Pakistan.

Keywords: Government Borrowing; Investment; Domestic Debt; Financial Development (search for similar items in EconPapers)
JEL-codes: E22 G02 H63 H74 (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (47)

Downloads: (external link)
https://bbejournal.com/index.php/BBE/article/view/256/211 (application/pdf)
https://bbejournal.com/index.php/BBE/article/view/256 (text/html)

Related works:
Working Paper: Impact of Government Borrowing on Financial Development (A case study of Pakistan) (2016)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:rfh:bbejor:v:5:y:2016:i:3:p:135-143

Access Statistics for this article

Bulletin of Business and Economics (BBE) is currently edited by Dr. Muhammad Irfan Chani

More articles in Bulletin of Business and Economics (BBE) from Research Foundation for Humanity (RFH) Contact information at EDIRC.
Bibliographic data for series maintained by Dr. Muhammad Irfan Chani ().