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Does Government Borrowing Crowd out Private Sector Credit in Pakistan

Sajjad Zaheer ()

Working Papers from eSocialSciences

Abstract: An analysis of the impact of government borrowing from the scheduled banks on the credit to private sector in Pakistan, using monthly data from 1998:M6 to 2015:M12. We find that a one percentage point growth in the government borrowing leads to 8 basis points crowding out of the private sector credit in four months. Albeit small, there is negative impact of government borrowing on the private sector credit. The results remain unchanged even after implementation of the interest rate corridor since August 2009. [SBP Working Paper series No. 836].

Keywords: Private sector credit; Government policy and regulation; Government borrowing; Emerging economies; banks’ balances; deposit; monetary policy; loan; demand; supply; Pakistan government; risk; free; returns (search for similar items in EconPapers)
Date: 2017-07
Note: Institutional Papers
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