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Does Government Borrowing Crowd out Private Sector Credit in Pakistan

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  • Sajjad Zaheer

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].

Suggested Citation

  • Sajjad Zaheer, 2017. "Does Government Borrowing Crowd out Private Sector Credit in Pakistan," Working Papers id:11945, eSocialSciences.
    • Handle: RePEc:ess:wpaper:id:11945
    Note: Institutional Papers
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    Cited by:

    1. Enock Mwakalila, 2020. "Crowding Out of Private Sector in Tanzania: Government Expenditure, Domestic Borrowing, and Lending Rates," Emerging Economy Studies, International Management Institute, vol. 6(1), pages 123-135, May.

    More about this item

    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;
    All these keywords.

    JEL classification:

    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation

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