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Table of Contents
Chapter 1: Introduction..........................................................................................................2
2.2 Hypotheses..................................................................................................................6
References................................................................................................................................11
Chapter 1:
Introduction
Developing economy of Pakistan needs the contribution of banks which dynamically can
change the ways of living standards of people Pakistan. The main purpose of banking
industry is to help poor people of Pakistan, which are living under the line of poverty
(Hashmi, Hashmi, & Irshad, 2014). Some of them are considered in middle class but due to
high rate of inflation and unemployment, these people are not earning profit and revenue
from their business to meet their household expenses, basic necessities and most importantly,
to do not contribute to the economy of the country (Aggarwal, 2014). Currently, the
economic condition of Pakistan is not up to the mark, due to high inflation, shortage of
electricity, poor transportation system, and business progress is generating not the expected
income or revenue to meet their financial expenses and many other related issues, which
Commercial banks are working under the concept of primary and secondary business of
banking (Barth, Daniel, & Tara, 2009). The primary business of commercial banks is
considered as one of the collecting funds from the community and extended credit in the form
of loans to people for their useful purpose, improve business conditions and creating more
opportunities directly influences the economic growth (Berger, Allen , David , & Humphrey,
2007). Well reputed banking organizations are also involved in the nonbanking activities
which described subsequent operational functions to well perform its operations in the
Now a day, most of the commercial banks are considered as one of the most important and
most complex financial institutions in various countries (Bartholdy & Roger , 2010). Their
main aim is to develop the financial institutions system complex, secure and minimize the
risk management factor and work for the betterment and improvement of financial
institutions working all around the global (Zsidisin, Panelli, & Upton, 2000).
This research study completely revolves around the investigation of the functionalities and
operational activities of banks, determining the way of living standard of middle class people
of Pakistan and how to overcome these problems from the help of the banking industry of
Pakistan. The strategic planning of banks is directly dealing with the problem of coordinating
with the customers and entire system (Golin & Delhaise, 2013). Today, in the presence of the
competitive business environment banking sector in Pakistan is facing many problems that
arise due to high default of the customers, recovery issues, late timings of the employees
working in the institutions, which demotivates the employees and lastly, many operational
problems.
very good as the economic position of Pakistan as compared to other developing countries is
low due to the high inflation rate, unemployment, energy crisis and many other related issues.
The focus of the study is to analyze the impact of banks on the developing of the economy
and bring improvement in the employment, inflation, expansion of the business and
1) To determine and explore the impact of bank on the way of living standards of
middle class of Pakistan.
2) To examine and explore the impact on improvement in business current condition
and economic growth on the living standards of middle class of Pakistan.
3) To determine and examine the impact of business loan product facility on the living
standards of middle class of Pakistan.
Chapter 2:
Literature Review
Today, competitive business environment banks play a progressive role for economic growth
and development (McConnell, C. R., 2008). It is analyzed that number of different research
studies have been conducted for specified area of bank loan business product facility for
improve the way of living standards in terms of people education, health, financial aid,
improve business scale and many other related activities performed for better outcome of
economy (Abbas & Christensen , 2007) (Ahmad & Bashir, 2013) (Christen, 2000) (Golin &
Delhaise, 2013). This research study will be conducted within the domain of the Pakistan. All
commercial banks and microfinance bank both plays a very dynamic role for development of
the economy. The main purposes of banks are to provide cash deposit facility and different
bank loan facility for changing the way of standards of people living in Pakistan (Kemal,
Din , & Qadir , 2007). Today, the current position of Pakistan economy is not up to the mark
due to many reasons such as inflation, shortage of resources, political instability, increase in
terrorism attacks and many other related activities performed leading towards the success of
Banking sector of Pakistan plays a dynamic role work for economic growth (Barro & Robert ,
1996). It is analyzed that banking sector of Pakistan need more innovation leading towards
the new things, determine the human history, effectively utilized the financial resources for
more development and use the advance information technology system (Cao & Jian, 2006).
This latest information technology is normally use for accomplishment of organization goals,
development and improves its overall efficiency and performance (Ahmad & Bashir, 2013).
Most of the commercial banks use the service innovation factor is considered as suggested
type of innovation.
The term service is generally used for sale services (Alam, 2013). They create opportunities
for white collars and low wages jobs such as cleaner, diver, clerks that are working in banks
etc. (Hunter, John , Ronda , & Hunter, 1984). This type of services exists mainly in all the
sectors. For example, financial institution, telecom sector, healthcare services E-t-c. They
increase the demand for specialist workers such as design, research and development of
Their high inflation rate of the unemployment as well as decrease in level of economic also
increased in the Pakistan. This is the reason why the Pakistans inflation rate is high
especially, in the banking sector (Barth, Daniel, & Tara, 2009). All of the better know that
cannot directly impact the Pakistan but indirect impact to the others. Pakistan does not have
long term deposit issues but do have long term insurance loans to the customer (McConnell,
C. R., 2008) (Haq & Kemal, 2007). The high inflation rate and we know that the financial
crisis may rises, especially in the banking sector. This can affect the employees turnover rate
as well.
The average people are not liable to meet their daily expenses. This is not a good sign for any
developing country (Balfour & Wechsler, 1996). The concepts of commercial banks are not
new for us. From the last one decade the commercial banks entrance in the local market to
provide facilities to lower middle class and strengthen economy of Pakistan (Zott & Amit,
2010). The main purpose of commercial banks believe that reduction of poverty, control of
inflation rate, small and innovative ideas motivates people to start or establish their own
business in the local market. Its directly impact on the strength of the economy (Thurik, A.R,
2007).
The commercial banks got the high importance working in Pakistan with the passage of time
and utilization of the international funds to work for the progression of the economy
(McConnell, C. R., 2008). All of these commercial banks are working under the law, act,
policy and procedure of the government, central bank and State bank of Pakistan (Jamal &
Policy, 2008). Their main aim is to sales promotion of their loan products, saving schemes,
account opening facility, funds transfers and many other banking operational activities are
performed to facilities the illiterate people of Pakistan (Aboagye, Anthony, & Joan , 2009).
The main objective of the commercial bank of Pakistan is to deposit cash, fund transfer,
clearing check, loan facility to customers and many other operational activities performed to
fulfill the requirement of the customers and State Bank of Pakistan (World Bank access to
financial services , 2004). Both, the commercial banks and Microfinance institutions are
commercial banking is invented from Assyrians, Babylonians and Athenians starts the
banking functions and operations in Venice one thousand one hundred seventy-one
The development of the commercial banking systems of Pakistan were recorded notable in
size and diversity operations. Numbers of various branches of same commercial banks were
opened in the region with the passage of time, funds and customer request and requirements
(Takang & Ntui , 2008). All of these commercial banks branches are interlinked with the
foreign banks to control the inflow and out flow of cash transactions.
These commercial banks of Pakistan also performed all the traditional function, activities,
dealing with the various products such as business loan facility, mortgage loan facility and
many other services, which are consistently updating and diversifying according to the needs
and requirements of the local and international customers or clients (Ali, KHAN, & AFZAL,
2012).
The economists of Pakistan are working for various purposes and develop different strategies,
policies and procedures have been adopted to overcome this problem. Well reputed
organization of Pakistan develops a network between the partnership, society and outreach
programs. This project PPAF continuously monitors and evaluates the performance,
It is analyzed that the borrowers level of income and expenditure has improved after taking
the loan amount. The commercial banks loan product facility amount provides employment
opportunities, reduce the poverty and to some extend the way of living standards are change
(Zaidi, S, 2006). On the other hand, the thinking level of consumers has been change and
they all move towards the monthly saving. The way of living standard of poor people are low
important aspect and issue for the developing country. The researcher mainly focuses on the
lower middle class of Pakistan, people who are living under the line of poverty,
unemployment, economic growth, inflation and many other poverty issues as well (Abbas &
Christensen , 2007). Economic development refers to the desirable changes that are taking
place in the economic life of the people of developing countries. According to the research
study model of the rural financial institutions were based on the distribution of the micro
been simulated in the related area identifying and analyzing the impact of bank loans in
transforming standards of living in Pakistan. These independent variables are business loan
product facility (Schmenner & Roger , 1986), improve current business condition (Ali,
KHAN, & AFZAL, 2012), economic growth (Alfaro & Laura, 2004) and increasing
opportunity (Dadfar, Brege, & Semnani, 2013) Dependent variable is living standards (Sen
Figure 1 Framework
1.2 Hypotheses
Some of the suggested hypotheses constructed on the variables extracted from past literature;
Hypothesis 1:
Business loan product facility is positively associated with people living standards of
Pakistan.
Hypothesis 2:
Hypothesis 3:
Hypothesis 4:
Chapter 3:
Research Methodology
Research methodology is considered as the main and important part of this study. The
researcher mainly focuses on the systematic approach of the theoretical framework model of
the study. Research methodology is based on the various phase that are helpful for the
researcher is to analyze the data in meaningful form. First phase of this research methodology
will be based on defined the problem statement. In this research study, the main problem that
the current situation of Pakistan is not very good as the economic position of Pakistan as
compared to other developing countries is low due to the high inflation rate, unemployment,
The focus of the research study is to analyze the impact banks on the developing of the
economy and improving the employment, inflation, expansion of the business and improving
the living standards of the middle class and practical implication as well (Hashmi, Hashmi, &
Irshad, 2014). Secondly, phase of the research methodology will be about the review of
literature based on the similar, past and previous research literature, theory and model which
is helpful for the researcher to develop the theoretical framework model and suggested
hypotheses according to the related topic. Thirdly, phase of this research methodology is the
research design, due to the fund and time constraint the researcher will be focusing on the
Design of this research study will be based on two main sources of the research data that are
primary data and secondary data. The primary research data will be used for data collection
with the support of questionnaires, and secondary data will be including the journals,
internets sources published and unpublished data and many other related data. The research
methodology is also presented in the Figure 3-2 Research Methodology. The researcher will
be using the multi feedback function approach that has been utilized in the research
methodology. So in this case, if the researcher wants to move back to some previous stage the
research can get back to the required stages. Waterfall techniques will not be applied in the
research methodology rather systematic approach will be applied. As the research study is
based on the primary data techniques, so the research required to move back to previous
stages and in some cases the feed forward will also be utilized depending upon the
requirements. The data will be analyzed through the integration of various tools and then
conclusion and recommendation about the data analysis and future direction as well will be
provided.
be considered through the information collected from the questionnaire technique. The
selected number of respondents will be participating in the research study for sharing their
views through the filling of questionnaire. Secondary source of data will be utilized in the
literature review where past research studies conducted by past researchers will be
considered.
research findings and interpretations can be extracted. Data Analysis will be conducted
through the application of multi regression, CHI Squared and correlation analysis. The
collected data will be transformed into various graphs so that analysis can be effectively
conducted.
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