Priority sector lending by banks in Pakistan

Abstract

The research is about to study priority sector lending by banks and details about lending pattern by banks to weaker sectors which is not economically stable and unpredictable. For this purpose, priority sectors and their lending’s were identified. Data was gathered through financial reports from a sample size of 10 banks for the year 2005-2015. The study aimed to identify how to dig out that lending has increase in priority sectors over the previous years and factors influencing priority sector lending’s. Various statistical tools were applied such as regression diagnostic, co relation, hausman test and compound growth was calculated. Results of the study revealed that lending advances to all the four sectors such as agriculture, textile, individual and others plays important role in its economic growth. Agriculture sector performed well among them, textile performance is better and it was improving every year from the calculation of growth rate. The other sectors are trying well yearly. Result of regression analysis of factor influencing on priority sector lending shows significance and positive impact on dependent variable. All the independent variables have more explanatory power than dependent variable.