Question: How do financial institutions play a vital role in the development of economic condition and what is the current

status of financial development institutions in Pakistan?

What are financial institutions? Private (shareholder-owned) or public (government-owned) organizations that, act as a channel between savers and borrowers of funds (suppliers and consumers of capital). Two main types of financial institutions (1) Depository banks and credit unions Depository banks and credit unions which pay interest on deposits from the interest earned on the loans. (2) Non-depository insurance companies and mutual funds (unit trusts) which collect funds by selling their policies or shares (units) to the public and provide returns in the form periodic benefits and profit payouts. What Is The Role Of Financial Institutions In Economic Development? Financial institutions play an extremely role in economic development. Financial institutions cater to important needs of society such as taking care of small saving at reasonable rate. Everyday working men and women have the option of putting their saving into a number of alternatives such as Government small saving schemes, deposit into a saving account provided by their bank, recurring, deposits, time deposits and also the alternative option of investing in mutual funds or stocks.

Financial institutions must also offer an extremely efficient service by developing themselves to make the best use of the credit in their systems. A decent financial institution must make sure that they cater to all the needs of investors by making for the big and expensive projects that are being undertaken by the industrial and service sectors. Although it is not just the big people that the financial institutions need to be backing. The small companies and independent business must also have credit support them if they are to expand and grow for the good of the country economy. Credit availability of infrastructure sector is also extremely important .The success of any financial system can be fathomed by finding out the availability of reliable and adequate credit

Question: How do financial institutions play a vital role in the development of economic condition and what is the current status of financial development institutions in Pakistan?

for infrastructure projects. Fortunately during the past about one decade there has been increased participation of the private sector in infrastructure projects. Financial institutions have played major role in the economic development of the country and most of the credit related schemes of the government to uplift the poorer and under-privileged sections have been implemented through the banking sector. The role of financial institutions has been important but it is going to be even more important in the future.

The financial institutions play a key role in development of a national economy because it functions as a medium of collecting and mobilizing resources to finance a business and development projects that are essential for economic development. A country without good financial system can be a major problem for the economy to function properly, to mediate sustainable private investment and promote entrepreneurship. Financial institutions ease market friction and influence the allocation of resources over different sector of the country.  Five key functions of financial system those are essential to economic development. According to Research his.diva-portal.org/smash/get/diva2:225151/FULLTEXT01      (1)Produce information about possible investment and allocation capital. (2) Monitor investment and provide expert cooperate governance. (3) Facilitate the trading, diversification and management of risk. (4) Mobilize and pool saving. (5) Ease the exchange of goods and services.

Question: How do financial institutions play a vital role in the development of economic condition and what is the current status of financial development institutions in Pakistan?

What is the current status of financial development institutions in Pakistan? Pakistan possess a wide range of financial institutions, commercial banks, specialized banks, National savings schemes, insurance companies, development finance institutions, investment Banks, stock exchanges, corporate brokerage houses, leasing companies, discount houses, microfinance Institutions and Islamic banks. They offer a whole range of products and services both on the Assets and liabilities side. The current status of the financial sector in Pakistan is the result of several policy shifts and Developments. Like many other developing countries, Pakistan also undertook the process of Financial restructuring through reforms in early 1990s to establish a more market-based system of Financial intermediation and Government financing, conduct the monetary policy more efficiently Through greater reliance on indirect instruments and increase the contribution to the rapid Development of the stock markets. In the World Economic Forum's Financial Development Report 2009, Pakistan has been ranked 49 out of 55 countries. Under Factors, Policies and Institutions pillar, Pakistan ranks 52nd in institutional environment, 50th in business environment and 48th in Financial Stability. In the Financial Intermediation Pillar, Pakistan ranks 46th in banking, 51st non-banking and 25th in Financial Markets. Under Financial access, Pakistan ranked 50th.