The Profitability and Efficiency of Foreign and Domestic Banks: A Mode of Economic Development

Abstract

For developing countries it is necessary to have a sound banking system in the growth framework since banking system has tremendous influence on the growth in the early stages. Pakistan initiated its banking reforms in the 1990s and allowed many foreign banks to open their branches in the different cities. Foreign banks entry in the financial markets of Pakistan had a positive and healthy influence on the performance and profitability of the domestic banking sector. Some researchers have compared the performance of domestic and foreign banks from 1988-1995 in the context of developed and developing countries. In developing countries, not adequate research has been conducted but a lot has been written about the effect of financial reforms conducted in various capacities.

Keywords: Profitability Efficiency, Domestic Banks, Foreign Banks, Economic Development