Does Government Borrowing Crowd out Private Sector Credit in Pakistan
Published By: SBP on eSS | Published Date: February , 2017An 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].
Author(s): Sajjad Zaheer | Posted on: Jul 31, 2017 | Views() | Download (336)