Challenges Faced by Banking Industry of Pakistan during Global Financial Crisis (2008-12)

This study aims at investigating the challenges faced by commercial banks of Pakistan especially five big well established banks during the period of global financial crisis. The key performance indicators for this purpose were liquidity, profitability and stability. This study covers a period of five years from 2008-2012 and the Year 2007 was taken as base year on the basis of that the impact and performance of selected five banks of country was gauged by using financial ratios as measuring tool .The financial ratios meant for Profitability, liquidity and capital structure were calculated and average of selected ratios of five big were used to avoid disparity in size. Also impact on performance of loans was evaluated to relate it with globalization. A survey was made by developing a close ended questionnaire; a five point Likert scale was used as a measuring tool to evaluate the response of Bankers, scholars & customers. The main findings are (I) there seems significant impact on deposits, liquidity and profitability of banking system. (II) Non Performing Loans were accumulated significantly after multi year better performance of healthy loans due to increase of interest rates by central bank to maintain the liquidity in system (III) It was also revealed that the cost of deposits were increased to maintain the books and confidence of stakeholders which has adversely affected the profitability of well established five big banks of the country