Banking Sector Liberalization and Efficiency Evidence from Pakistan

Banking sector of Pakistan has been transformed over the past three decades through liberalization, the privatization of nationalized commercial banks, entrance of domestic private banks, the removal of barriers on the entry of foreign banks, the introduction of prudential regulations and merger & acquisitions reforms. The effects of these reforms have measured by using descriptive and ordinary least square (OLS) techniques. The descriptive results show that during pre-reform, first reform, second reform period foreign banks were the most efficient bank in profit, domestic private banks, public banks and privatized banks following respectively. But during the third reform period private banks were the most efficient in profit earning, foreign banks, and public banks and privatized banks following respectively.