By now, anyone who has been observing the Pakistani banking sector has had the same lament for the past 10 years: why do they not lend to the private sector? There are good reasons why the banks in Pakistan have seen superior risk-adjusted returns on government bonds compared to private sector lending, some of which has been covered by Profit in previous editions. This story, however, is not about why they find government lending attractive, but rather why they find private sector lending unattractive. And even when the banks do lend to the private sector, it tends to not end very well for the banks. Article continues after this advertisementIn other words, Pakistan is unusually bad at private sector defaults, even by emerging markets standards.
Source: Pakistan Today May 03, 2021 04:29 UTC