final thesis muhammad usman (1)

8/10/2019 Final Thesis Muhammad Usman (1)

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The Efect o Ownership onOrganizational Perormance

A Case Study of Banking Sector in Pakistan

Author: Muhammad Usman (740807-T095)

Supervisor: Pro! "va #itt$om

Master%s Thesis in &usiness Administration' M&Aproramme

ate o su$mission: Septem$er *+' ,0*0



Abstract

Aims:

The main aims o this researh are to provide more empiria. evidenes ortheor/ o propert/ rihts and pu$.i hoie theor/ and to test these theoriesin a ne environment i!e! $an1in setor o Pa1istan! This researh omparesperormane o pu$.i and private $an1s in Pa1istan on the $asis o ourperormane measures' pro2ta$i.it/' .i3uidit/' so.ven/ and eien/! t a.sostudies the e6et o po.itis on pu$.i $an1s!

Method:

Main./ 3uantitative approah is uti.ied in this thesis to ompare perormaneo pu$.i and private $an1s in Pa1istan in terms o pro2ta$i.it/' .i3uidit/'

so.ven/ and eien/! atio ana./sis is used or this purpose! ua.itativeana./sis is $ased on 3ua.itative stud/ o empiria. 2ndins o 3uantitativeana./sis ith respet to e.etions and o$servin .endin $ehavior o pu$.iand private $an1s a.on ith stud/ o net interest marin durin e.etion/ears!

Major Findings:

The theor/ o propert/ rihts and pu$.i hoie .iterature support privateonership or superior perormane as ompared to pu$.i onership! romempiria. 2ndins' ver/ ea1 support is ound or $oth theories!

;ut o te.ve ratios used in ratio ana./sis' ten ratios support pu$.i onershipor superior perormane as ompared to private onership and on./ toratios 3uote that private onership is superior in perormane than pu$.ionership! rom empiria. 2ndins it an $e on.uded that perormane o pu$.i $an1s is superior to private $an1s in Pa1istan in terms o pro2ta$i.it/'.i3uidit/' so.ven/ and eien/!

Simi.ar./' out o te.ve ratios' on./ si< ratios provided evidene o e6et o e.etions on perormane o pu$.i onership hih is a ea1 support orpu$.i hoie theor/! Moreover' .endin $ehavior o pu$.i and private $an1s

a.on ith stud/ o net interest marin has tota../ ru.ed out the presene o po.itia. in=uene on pu$.i $an1s! t an $e on.uded rom these empiria.2ndins that either po.itia. in=uene on pu$.i $an1s is minimied or po.itia.in=uene is a6etin $oth setors o $an1s in Pa1istan!

As $an1in setor in Pa1istan is hih./ ompetitive no due to introdution o 2nania. reorms in Pa1istan' it an $e on.uded that theor/ o propert/rihts and pu$.i hoie theor/ do not or1 e.. in ompetitive mar1etsespeia../ Pa1istan!

t an a.so $e on.uded rom empiria. 2ndins that privatiation is not theon./ so.ution to poor perormane o pu$.i onership! The introdution o ompetition an su$stantia../ improve perormane o pu$.i onership!

2



Keywords:

pu$.i versus private' theor/ o propert/ rihts' pu$.i hoie theor/' pu$.iversus private $an1s!

Acknowledgement

irst and oremost' ou.d .i1e to e<press m/ sinere ratitude to A..ahA.miht/ or $.essin me ourae' potentia. and ener/ to or1 on thismaster thesis! The ahievement o this thesis is throuh theontri$utions o man/ peop.e to hom ou.d .i1e to sho m/appreiations! ou.d .i1e to onve/ m/ sinere rateu.ness to theo..oin

irst' ish to than1 to m/ supervisor Pro! "va #itt$om or ivin me anopportunit/ to or1 on this interestin topi and or providin meomments' onstrutive ideas' suestions and uidane durin theho.e ourse o this thesis proess!

ou.d .i1e to e<press m/ speia. than1s to Pro! r! 3$a. S! >ussain(?am$ride Universit/' U@) and Pro! Mira Muhammad u$air &ai (B?o..ee Siha.a' s.ama$ad) or he.pin me in thesis dratin and proo readin!

am a.so rateu. to Mr! Muneer s.am uereshi (Cahore Sto1 "<hane) andPro! r! Asrar Ahmad ("duation Universit/' Cahore) or he.pin me in data

o..etion! am a.so than1u. to the operationa. team at Sam$a &an1BuDrana.a $ranh' Mr! Muhammad Aa.' Mr! A.i aa' Mr! Muhammadehman and Mr! Moaam aroo3 or he.pin me in methodo.o/ setion!

Man/ than1s shou.d o to the Prinipa. o m/ o..ee' Pro! r! MuhammadAa. Eohar (edera. Bovt! ?o..ee Siha.a' s.ama$ad) or his inva.ua$.euidane and or aardin me speia. re.a<ation rom o..ee duties durinthe thesis proess!

M/ appreiations shou.d a.so o to m/ .ose riends' Munaar Sa.eem(Eon1opin' Seden)' Mahar TaDamma. >ashmi (Fa<Do' Seden)' "mma Eohansson (Boten$er' Seden)' Pro! r! Munir Ahmad (B ?o..ee Siha.a's.ama$ad) and Pro! S/ed Muhammad @ha.id mran (M?& ?o..ee -7G+'s.ama$ad) in providin me motivation' support and enthusiasm durin theho.e thesis proess!

n the end' am immense./ inde$ted to m/ ami./ mem$ers or ivin mesupport' o-operation' and enouraement and or shoin patiene durinthis thesis!

Muhammad Usman

3



usmanentHhotmai.!om

M&A student

Shoo. o Manaement'

&.e1ine nstitute o Tehno.o/'

Seden!

Auust' ,0*0

Table o Contents

CHAPTER 1 !ntrod"ction##########################################################################1$

*!* &a1round:--------------------------------------------------------------------*,

*!, esearh uestions:-----------------------------------------------------------*4

*!+Methodo.o/--------------------------------------------------------------------*4

*!4 Sini2ane o esearh:-----------------------------------------------------*5

*!5 Aims and ;$Detives:----------------------------------------------------------*5

*!I &ene2iaries o esearh:-----------------------------------------------------*5

*!7 Cimitations o esearh:------------------------------------------------------*I

*!8 Struture o Thesis: Chapters -------------------------------------------------*I

*!8!* ntrodution:------------------------------------------------------------------*I

*!8!, ;vervie o inania. eorms in Pa1istan:

-----------------------------*I

4

mailto:[email protected]

mailto:[email protected]



*!8!+ Citerature evie:-----------------------------------------------------------*I

*!8!4! esearh Methodo.o/:----------------------------------------------------*I

*!8!5 Ana./sis and "mpiria. indins:-----------------------------------------*I

*!8!I ?on.usions and eommendations:-------------------------------------*I

CHAPTER $ O%er%iew o &inancial Reorms in Pakistan###################################1'

,!* ntrodution:

--------------------------------------------------------------------*7,!, inania. Setor eorms in Pa1istan:

--------------------------------------*7

,!,!* inania. Setor Ci$era.iation:-------------------------------------------*8

,!,!, Jon-&an1in inania. nstitutions (J&):----------------------------*9

,!,!+ Privatiation:-----------------------------------------------------------------*9

,!,!4 eu.ator/ eorms:--------------------------------------------------------*9

,!,!5 Prudentia. eu.ationeorms---------------------------------------------*9

,!,!I Pa/ment S/stem eorms:------------------------------------------------,0

5



,!,!7 ?apita. Mar1et eorms:--------------------------------------------------,0

,!+ "6et o inania. eorms:------------------------------------------------,0

CHAPTER ( )iterat"re Re%iew###################################################################$1

+!* ;nership:---------------------------------------------------------------------,*

+!, Perormane:-------------------------------------------------------------------,*

+!,!* Past Periods:-----------------------------------------------------------------,*

+!,!, Simi.ar &usinesses:---------------------------------------------------------,*

+!,!+ P.anned Perormane:------------------------------------------------------,,

+!+ Theor/ o Propert/ ihts:--------------------------------------------------,,

+!+!* Propert/ iht: e2nition:------------------------------------------------,,

+!+!, T/pes o Propert/ ihts:-------------------------------------------------,,

+!+!+ ?harateristis o Propert/ ihts:

---------------------------------------,+

+!+!4 Propert/ iht S/stems (orms o ;nership):------------------------,+

+!+!5 "6et o Propert/ iht S/stems on "ien/:-----------------------,4

+!4 ators esponsi$.e or i6erentia. Perormane:

-----------------------,I

6



+!4!* The "6et o nentives:--------------------------------------------------,I

+!4!, The "6et o Po.itis:------------------------------------------------------,7

+!4!+ The "6ets o Eo$ ?harateristis and ;raniationa.?.imate: ------,9

+!4!4 The "6et o ?ompetition and eu.ation:-----------------------------+0

+!5 ?omparin Pu$.i versus Private Perormane: Evidences --------------+,

7



+!I Preerenes or Pu$.i and Private ;nership:----------------------------++

CHAPTER * Research +ethodolog,#############################################################(-

4!* esearh Phi.osoph/:---------------------------------------------------------+5

4!, esearh Approah:-----------------------------------------------------------+5

4!+ esearh Strate/:-------------------------------------------------------------+5

4!4 Samp.e Se.etion:--------------------------------------------------------------+I

4!5 ata ?o..etion:----------------------------------------------------------------+I

4!I uantitative Ana./sis:---------------------------------------------------------+7

4!I!* Pro2ta$i.it/ atios:----------------------------------------------------------+7

4!I!, Ci3uidit/ atios:-------------------------------------------------------------+8

4!I!+ So.ven/ and is1 atios:-------------------------------------------------+9

4!I!4 "ien/ or Ativit/ atios:

----------------------------------------------+9

4!7 etermination o Po.itia. n=uene:---------------------------------------40

CHAPTER - Anal,sis and Empirical &indings#################################################*1

5!* Pro2ta$i.it/ atios:

------------------------------------------------------------4*

8



5!*!* eturn on Assets (;A):--------------------------------------------------4*

5!*!, eturn on "3uit/ (;"):---------------------------------------------------4,

5!*!+ Kie.d on "arnin Assets (K;"A):----------------------------------------4+

5!, Ci3uidit/ atios:---------------------------------------------------------------44

9



5!,!* ?ash to eposit atio (?):---------------------------------------------44

5!,!, Coan to eposit atio (C):---------------------------------------------45

5!,!+ Coan to Asset atio (CA):------------------------------------------------4I

5!+ So.ven/ and is1 atios:----------------------------------------------------48

5!+!* e$t-"3uit/ atio ("):--------------------------------------------------48

5!+!, e$t to Tota. Asset atio (TA):---------------------------------------49

5!+!+ "3uit/ Mu.tip.ier ("M):----------------------------------------------------50

5!4 "ien/ or Ativit/ atios:------------------------------------------------5*

5!4!* Asset Uti.iation (AU):-----------------------------------------------------5*

5!4!, nome "<pense atio ("):---------------------------------------------5,

5!4!+ ;peratin "ien/ (;"):------------------------------------------------5+

5!5 Cendin &ehaviour o &an1s:

-----------------------------------------------54

5.6 Empirical Findings: ----------------------------------------------------------55

1010



CHAPTER . Concl"sions and Recommendations############################################-'

I!* ?on.usions:-------------------------------------------------------------------57

I!, eommendations:------------------------------------------------------------57

Reerences##############################################################################################-/

)ist o Tables

Ta$.e-4!*: Samp.e Pairs----------------------------------------------------------------------+I

Ta$.e-5!*: eturn on Assets-----------------------------------------------------------------4,

Ta$.e-5!,: eturn on "3uit/-----------------------------------------------------------------4+

Ta$.e-5!+: Kie.d on "arnin Assets--------------------------------------------------------44

Ta$.e-5!4: ?ash to eposit atio-----------------------------------------------------------45

Ta$.e-5!5: Coan to eposit atio-----------------------------------------------------------4I

Ta$.e-5!I: Coan to Asset atio--------------------------------------------------------------47

Ta$.e-5!7: e$t-"3uit/ atio----------------------------------------------------------------49

Ta$.e-5!8: e$t to Tota. Asset atio-------------------------------------------------------50

Ta$.e-5!9: "3uit/ Mu.tip.ier-----------------------------------------------------------------5*

Ta$.e-5!*0: Asset Uti.iation----------------------------------------------------------------5,

Ta$.e-5!**: nome "<pense atio---------------------------------------------------------5+

Ta$.e-5!*,: ;peratin "ien/-----------------------------------------------------------54

1111



Ta$.e-5!*+: L inrease or derease in .endin-------------------------------------------55

Ta$.e-5!*4: ;vera.. omparison o pu$.i and private$an1s---------------------------5I

)ist o &ig"res

iure-5!*: eturn on Assets---------------------------------------------------------------------4,

iure-5!,: eturn on "3uit/---------------------------------------------------------------------4+

iure-5!+: Kie.d on "arnin Assets------------------------------------------------------------44

iure-5!4: ?ash to eposit atio---------------------------------------------------------------45

iure-5!5: Coan to eposit atio---------------------------------------------------------------4I

iure-5!I: Coan to Asset atio------------------------------------------------------------------47

iure-5!7: e$t-"3uit/ atio-------------------------------------------------------------------48

iure-5!8: e$t to Tota. Asset

atio-----------------------------------------------------------49

1212



iure-5!9: "3uit/ Mu.tip.ier---------------------------------------------------------------------50

iure-5!*0: Asset Uti.iation--------------------------------------------------------------------5,

iure-5!**: nome "<penseatio-------------------------------------------------------------5+

iure-5!*,: ;peratin "ien/---------------------------------------------------------------54

iure-5!*+: L inrease or derease in.endin------------------------------------------------55

1313



)ist o Appendices

APP"J A: #e$sites o &an1s under stud/------------------------------------------I4

APP"J &: esription o inania. atios% Faria$.es-----------------------------I5

APP"J ?: atio Ana./sis o ndividua. &an1s-------------------------------------II

APP"J : Cendin &ehaviour o ndividua. &an1s--------------------------------I9

1414



CHAPTER 1

!ntrod"ction

101 ackgro"nd The $an1in setor in Pa1istan is roin more ompetitive due to hueave o privatiation started in the 90s' .i$era.iation o 2nania. mar1et'roth in num$er o ne $an1s in the mar1et' tihtenin o prudentia.reu.ations and entr/ o orein investment in this setor! Jo' 80 L o s/stem assets are in hands o private $an1s as ompared to *0 L in *990!ue to introdution o these 2nania. reorms' eien/ is reat./improved $/ pu$.i $an1s' private $an1s and ne./ privatied $an1s inPa1istan (di Patti N >ard/ ,005)! n vie o intense ompetition in thesetor' perormane o $an1s and ators a6etin it are no o reatonerns to researhers and pratitioners! ;ne o these ators is orm o onership! ;nership ives ontro. and $arainin poer to oners touse strateies that are $ene2ia. to them (Brossman N >art *98IO >art NMoore *990O >art *995)! ;nership a6ets the hoie o propert/ rihtsassinments' po.itia. in=uene' oraniationa. .imate and Do$harateristis .eadin to di6erent $usiness praties and strateies hihin turn are responsi$.e or di6erentia. perormane o onership orms!Most important theories that stud/ the e6et o di6erent onership orms

on oraniationa. perormane are theor/ o propert/ rihts and pu$.ihoie theor/!

The theor/ o propert/ rihts eva.uates the e6et o onership orms onoraniationa. perormane on $asis o propert/ rihts assinments todeision ma1ers and inentives derived rom those propert/ rihts!Aordin to this propert/ rihts theor/' propert/ rihts in privateonership are u../ assined to deision ma1ers hi.e in pu$.i onership'the assinment o propert/ rihts to deision ma1ers is partia. hih .eadsto poor perormane as ompared to private onership! ?onse3uent./propert/ rihts theor/ suests that pu$.i oraniations shou.d $e .ess

eient and .ess pro2ta$.e than private oraniations (?arro.. ,004)!

Pu$.i hoie theor/ studies the e6et o po.itis on pu$.i oraniations! This theor/ presents the vie that pu$.i oraniations are ontro..ed $/po.itiians and $ureaurats ho use these oraniations or theirpersonne. $ene2ts and as a resu.t eien/ o pu$.i oraniations is .essas ompared to private oraniations $eause it is ost./ or po.itiians toin=uene private oraniations (Sh.eier N Fishn/ *994)!

Fast evidenes are ound in .iterature a$out po.itia. in=uene on pu$.ioraniations! t is o$served that po.itiians use strate/ o e<ess

spendin to inrease their po.itia. support! Po.itia. in=uene on pu$.ioraniations is more pronouned near the e.etions! Mio' Pania N

1616



Kane (,005) ound that pu$.i $an1s have .oer pro2ta$i.it/ than private$an1s and di6erentia. perormane o pu$.i and private $an1s idensdurin e.etion /ear in deve.opin ountries! in (,005) studied $an1.eve. data o +I ountries and ound that .endin $ehaviour o $an1s isa6eted $/ the e.etions! >e urther proved that pu$.i $an1s inrease

their .endin near the e.etions re.ative to private $an1s! Sapiena (,004)o$served that .endin $ehaviour o $an1s is haned ith e.etora. resu.tso po.itia. part/ a.iated ith the $an1s in ta./! t is on.uded rom theseevidenes that durin the e.etion /ear' perormane o pu$.ioraniations is poor than private oraniations!

n addition to propert/ rihts assinments and po.itia. in=uene' there arenum$er o ompetin ators that are a.so responsi$.e or di6erentia.perormane o pu$.i and private oraniations $ut a.. these ators area.so .in1ed ith onership orms! These ators are soures o undin andmar1et e<posure' omp.e<it/ ithin oraniations' uiness o oner%s

identit/ and Do$ seurit/!

&oth pu$.i and private oraniations di6er in their soures o undin andmar1et e<posure! Private oraniations depend on mar1et soures or theirundin hih aard them inentives and pena.ties to meet mar1etdemands hi.e pu$.i oraniations most./ reeive undin $/appropriation proess hih an $e in=uened $/ po.itia. ores! nprivate oraniations' environment is ompetitive and d/nami ith pro2tma<imiation as the on./ o$Detive! So the/ deve.op eient strateies tomeet mar1et and ustomer demands! #hi.e pu$.i manaers o..o status-3uo and have num$er o ompetin and am$iuous oa.s to meet (aine/'&a1o6 N Cevine *978)! ?onse3uent./ eien/ o pu$.i oraniations is.ess than private oraniations!

Aen/ issues a.so a6et perormane o $oth pu$.i and privateoraniations! Aen/ issues are dominant in those private oraniationsthat are ontro..ed $/ manaers and a$sent in oners% ontro..ed privateoraniations (&oardman N Finin *99,)! Aen/ issues in pu$.ioraniations are present $eteen po.itiians and $ureaurats and arisedue to .a1 o aounta$i.it/ (#hitehead *988)! So' aen/ issues a6etperormane o $oth pu$.i and private oraniations to same or .esser

e<tent!

Another ator that a6ets perormane o pu$.i and private oraniationsis Do$ seurit/! t is .ess .i1e./ that emp.o/ees havin seured Do$s i..invo.ve in orruption than emp.o/ees ith temporar/ Do$s (Candes NPosner *975)! This ator supports pu$.i oraniations more than privateoraniations $eause Do$ seurit/ is hiher in pu$.i oraniations thanprivate oraniations!

n addition to these ators there is another driver o perormane! t isompetition that a.so has e6et on perormane o $oth t/pes o

oraniations $ut e<tent o its e6et on perormane o onership isde$ata$.e in .iterature! ;ne roup o sho.ars is o the vie that

1717



ompetition is more important indiator o perormane than onership o oraniations! #hen ompetitive produt mar1ets are normative./appropriate i!e! there is no produt mar1ets ai.ure then onership doesnot matter! Seond roup o sho.ars arue that a.thouh ompetitiona6ets perormane o oraniations $ut onership sti.. matters! Pu$.i

oraniations perorm poor than private oraniations in ompetitivemar1ets! ?ompetition Dust moderates the re.ationship $eteen onershipand perormane (&oardman N Finin *99,)!

n onnetion ith these on.usions presented $/ .iterature' researhershave presented di6erent a.ternatives to ope ith poor perormane o pu$.i onership! ;ne o these a.ternatives suested $/ researhers isprivatiation! &ut this a.ternative or1s e.. in ompetitive environment! tis o$served that state-oned enterprises that ere privatied innonompetitive environment did not sho an/ improvement in returns onsa.es! >oever' improvements ere dramati here privatiation as

arried in a ompetitive environment! So researhers suested thatintrodution o ompetition an su$stantia../ improve eien/ o pu$.ioraniations (Meinson' Jash N van anden$orh *994)! urther' someresearhers suested that $/ assinin residua. rihts o pu$.ioraniation to ta< pa/in pu$.i' eien/ o pu$.i oraniations an $eimproved (?arro.. ,004)!

&eore reahin to a.ternatives or poor perormane o pu$.i onership'it is advisa$.e to understand the o$Detives o pu$.i and privateonership! Private onership has on./ o$Detive o earnin pro2t hi.epu$.i onership a.so have deve.opmenta. mandate or soia. oa.s tomeet in addition to earn pro2t! These soia. oa.s and deve.opmenta.mandate are a.so responsi$.e or poor perormane o pu$.i onership asompared to private onership $eause these are not in.uded in the2nania. statements hih are ommon./ used to measure perormane o these onership orms (Sti.it *994)! t means that pu$.i onershipshou.d not $e tota../ ru.ed out as there are some situations here pu$.ionership shou.d $e preerred over private onership (Sh.eier *998)!

&oth theories ited a$ove .ear./ support private oraniations or superiorperormane as ompared to pu$.i oraniations! >oever' hen

.iterature as revieed' e3uivoa. resu.ts ere ound! Some studies avourpu$.i oraniations hi.e rest o them avour private oraniation orsuperior perormane! t means that these theories re3uire more rioroustestin in order to reah enera.iation! n order to test these theories' theon.usion statement put orard $/ $oth these theories i!e! privateoraniations are superior in perormane than pu$.i oraniations ista1en as h/pothesis $/ this researh to test this h/pothesis in $an1insetor in Pa1istan!

1818



10$ Research 2"estions

The se.eted h/pothesis is tested $/ anserin o..oin researh3uestions!

• ;ut o pu$.i and private $an1in setors in Pa1istan' hih setorsho superior perormane in terms o pro2ta$i.it/' .i3uidit/'so.ven/ and eien/

• >o muh the e.etions a6et the di6erentia. perormane o pu$.iand private $an1s in Pa1istan

• >o muh .endin $ehaviour o pu$.i $an1s has underone ahane durin e.etion /ears

10( +ethodolog, This stud/ is arried out in ontro..ed environment so that re.ia$.e resu.ts areo$tained in the onte<t o e6et o onership! ndustr/ ator is ontro..ed asa.. the samp.es $e.on to $an1in setor! n order to ontro. ators o $an1sie and $an1in e<periene' $an1s o simi.ar sie (num$er o $ranhes) andhistor/ (num$er o /ears in .oa. 2nania. mar1et) are se.eted! n order toremove the e6et o privatiation' those $an1s are se.eted that are ithintheir respetive setor or the .ast at .east 2ve /ears! ?ountr/ ator is a.so

ontro..ed as a.. samp.e $an1s are domesti $an1s in Pa1istan! ue to ontro.o ountr/ ator' a.. the samp.e $an1s are ain simi.ar ompetitive ores!

1919



or anserin 2rst researh 3uestion' ratio ana./sis (*, ratios in tota.) isused to measure perormane o pu$.i and private setor $an1s (o ompara$.e sie and histor/) on the $asis o our perormanemeasures i!e! pro2ta$i.it/' .i3uidit/' so.ven/ and eien/! irstresearh 3uestion provides empiria. evidene or propert/ rihts

theor/ and pu$.i hoie theor/!

Seond researh 3uestion is ansered $/ o$servin the e6et o e.etionson a.. the te.ve ratios o$tained rom ratio ana./sis in 2rst researh3uestion! or third researh 3uestion' it is o$served i there is an/a$rupt hane in .endin $ehavior o pu$.i and private $an1s a.onith stud/ o net interest marin Dust $eore the e.etions! Seond andthird 3uestions stud/ the e6et o po.itis on perormane o pu$.i$an1s and provide empiria. evidenes or pu$.i hoie theor/!

10* 3igni4cance o Research

n Pa1istan' man/ studies have arried out to measure omparativeperormane o $an1s $ut most o them are in onte<t o e6et o 2nania. reorms' pre- and post-privatiation perormane or $eteens.ami and onventiona. $an1in! Jo stud/ has ound /et onomparative perormane o $an1s in onte<t o e6et o onershiporms! Most o the previous studies in the area o omparativeperormane o pu$.i and private onership did not sho an/ sin o

ontro. varia$.es! As urrent researh is arried out in ontro..edenvironment so it i.. $e a useu. addition to the $u.1 o .iterature!

Most o previous studies ere onduted ith use o ata "nve.opmentAna./sis or Shoasti rontier Ana./sis in area o omparativeperormane! This stud/ preerred to use ratio ana./sis hih is most./used $/ $an1 reu.ators (Sa$i *99IO Samad *999O Spind.er *99*) andthose ratios are se.eted hih are ommon./ used $/ $an1 reu.ators!

10- Aims and Ob5ecti%es The main aims and o$Detives o this researh are to provide more empiria.evidenes or theor/ o propert/ rihts and pu$.i hoie theor/ and to testtheor/ o propert/ rihts and pu$.i hoie theor/ in a ne environment i!e!$an1in setor in Pa1istan!

10. ene4ciaries o Research The $ene2iaries o this researh are the e<istin and potentia. shareho.ders'

$an1 depositors' and investors' e<perts o pu$.i po.i/' State &an1 o

2020



Pa1istan' Privatiation ?ommission o Pa1istan' Ministr/ o inane' researhstudents and $an1 manaers!

10' )imitations o Research This researh is .imited to on./ ommeria. and domesti shedu.ed $an1s inPa1istan! So miro2nane institutions' the entra. $an1' speia.ied $an1s's.ami $an1s' domesti $an1s ith orein onership and orein $an1s arenot in.uded in this researh!

10/ 3tr"ct"re o Thesis Chapters

10/01 !ntrod"ction

n this hapter' detai.ed $a1round to researh topi' researh 3uestions'methodo.o/' sini2ane' aims and o$Detives' $ene2iaries o this researha.on ith .imitations and at the end omp.ete struture o ho.e thesis ispresented!

10/0$ O%er%iew o &inancial Reorms in Pakistan

n this hapter' an overvie o $an1in setor o Pa1istan is presented a.onith $rie summar/ o 2nania. reorms introdued $/ the overnment and

their e6ets on .oa. 2nania. mar1et!

10/0( )iterat"re Re%iew

n this hapter' re.evant theories a$out omparative perormane o pu$.iand private onership are presented! urther' ators responsi$.e or theirdi6erentia. perormane are disussed! ina../' resu.ts o previous studies insame area are presented and situations are disussed here pu$.i or privateonership shou.d $e preerred!

10/0*0 Research +ethodolog,

n this hapter' researh phi.osoph/' researh strateies and researhapproah used in this thesis are disussed! Then samp.e se.etion strate/'data o..etion methods and ana./tia. tehni3ues $ein used are du./presented!

10/0- Anal,sis and Empirical &indings

n this hapter' ana./sis o data athered is arried out and empiria. 2ndinsare orre.ated ith the .iterature!

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10/0. Concl"sions and Recommendations

n this hapter' on.usions o empiria. 2ndins are presented! Then area oruture researhes .oser to this researh is hih.ihted!

CHAPTER $

O%er%iew o &inancial Reorms inPakistan

Pa1istan is a dense./ popu.ated ountr/ .oated in South Asia havin Ith

position in the or.d ran1in o ountries $/ popu.ation and +I th position inthe or.d ran1in o ountries $/ area (?A ,0*0)!

$01 !ntrod"ction The 2nania. setor o a ountr/ onsists o those entities that are enaed intransations invo.vin 2nania. instruments in mone/' apita. and oreine<hane mar1ets! This setor is stron./ .in1ed ith other setors o eonom/ .i1e e<terna.' rea. and 2sa. setors! ts ro.e as an enine o eonomi roth has ained a.most onsensus amon modern eonomists(>ani ,00+)!

The 2nania. setor o Pa1istan onsists o reu.ators' shedu.ed ommeria.$an1s' miro2nane $an1sGinstitutions' speia.ied $an1s' modara$as (s.ami$an1in)' deve.opment 2nane institutions and sto1 mar1et! There are ourpu$.i setor $an1s' tent/ private $an1s' our speia.ied $an1s' 2ve s.ami$an1s' seven orein $an1s' seven miro2nane institutions' and eihtdeve.opment 2nane institutions operatin in Pa1istan (State &an1 o Pa1istan ,0*0)!

"ar.ier' the 2nania. setor as main./ reu.ated $/ three oraniations suhas State &an1 o Pa1istan (S&P)' Pa1istan &an1in ?ouni. and ?orporate CaAuthorit/ (?CA)! The S&P is entra. $an1 in Pa1istan hi.e Pa1istan &an1in?ouni. as monitor o perormane o nationa.ied ommeria. $an1s and?CA reu.ated e3uit/ mar1et! Jo S&P is iven so.e responsi$i.it/ to reu.ate$an1in setor as Pa1istan &an1in ?ouni. as a$o.ished in *997! n order toreu.ate apita. mar1et' .easin and investment' a ne oraniation asesta$.ished in ,00* name./ Seurities and "<hane ?ommission o Pa1istan(S"?P)! The S"?P rep.aed ?CA and $eame independent reu.ator (>ani ,00+)!

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$0$ &inancial 3ector Reorms inPakistan

inania. setor reorms omprise a set o ations and uide.ines to reduedistortions and deve.opin a ompetitive prie mehanism in 2nania.mar1ets! t in.udes strutura. and institutiona. hanes spread over time! The se3uene and intensit/ o 2nania. reorms depend upon initia.onditions o the eonom/!

The 2nania. setor o Pa1istan has one throuh num$er o hanes sine*990! These in.ude .i$era.iation o ne $an1 openin po.i/ hih resu.tedinto emerene o stron private $an1in setor in Pa1istan' strenthenedthe ro.e o ontro..in authorities suh as S&P and S"?P and $rouht out2nania. setor reorms hih haned onership o $an1in rom

overnment-oned to private setor! Jo share o overnment-oned $an1sis reat./ redued as ompared to private $an1s!

The 2nania. setor reorms too1 p.ae in to staes' $oth on advie o nternationa. Monetar/ und (M) and #or.d &an1! irst stae as started in*990 and seond stae as started in *997! The 2nania. re-struturinproess in Pa1istan has main./ ta1en to steps: 2rst step .eads tostrenthenin o 2nania. institutions and seond step .eads to thedeve.opment o an eient and ompetitive 2nania. mar1et!

n order to improve eien/ o 2nania. setor' overnment too1 initiative to

start maroeonomi and 2nania. setor restruturin proram in *997!nternationa. donors suh as nternationa. Monetar/ und (M)' #or.d &an1and overnment o Eapan provided tehnia. support and $an1in setoradDustment .oan (&SAC)! Main o$Detives o this proram ere to enhane thereover/ o non-perormin .oans' retrenhment o surp.us sta6' .osure o over-e<tended $ranhes' privatiation o $an1s' introdution o internationa.aountin standards' strenthenin o prudentia. reu.ations andesta$.ishment o $an1in ourts! The main ous as to improve eien/ o overnment-oned $an1s $/ reduin ost' omp.etin privatiation o $an1s' .i$era.iin $an1 $ranhin po.i/' redution in ta<es' interatin o

nationa. savins sheme to the 2nania. mar1et' removin mandator/p.aement o orein urren/ deposits $/ ommeria. $an1s' andstrenthenin ro.e o entra. $an1 as an e6etive reu.ator o $an1in setor(a//um N Ahmed ,00I)! To ahieve these oa.s' o..oin measures ereta1en!

$0$01 &inancial 3ector )iberalization

There are numerous eien/ issues that are assoiated ith overnmentonership o 2nania. institutions! At time o independene o Pa1istan i!e! *4Auust *947' >a$i$ &an1 Cimited (>&C) as inherited to Pa1istan as it asesta$.ished in *94* near Mum$ai and shited to Pa1istan ater theindependene! ;n *st o Eu./' *948' entra. $an1 o Pa1istan (S&P) as

2323



esta$.ished in partnership ith overnment and private setor! Ater one/ear' overnment set up a u../ overnment-oned $an1 name./ Jationa.&an1 o Pa1istan (J&P)! The $an1in setor in Pa1istan has $een dominated$/ overnment-oned $an1s hih had aommodated the 2nania. needs o pu$.i' overnment and private setors (@han *995)!

n *974' Bovernment o Pa1istan adopted nationa.iation po.i/ andnationa.ied a.. $an1s operatin in mar1et ith e.imination o private setorand diretin redit resoures to hih priorit/ setors o the eonom/! The$ranh netor1 o nationa.ied ommeria. $an1s pro.ierated in a.. reionsand territories in order to provide $an1in servies to a.. areas ithout ta1ininto aount easi$i.it/ and via$i.it/ o suh e<pansion! The $ureaurationtro. o nationa.ied $an1s a.on ith .a1 o hea.th/ ompetition rendered$an1in servies hih./ ineient and removed aounta$i.it/ mehanism inthe setor! The dominane o overnment-oned $an1s in 2nania. setor .edto poor eien/ in the $an1in setor (U.->a3ue *997)! Moreover'

reu.ator/ mehanism o $an1in operations as a.so ea1ened due tomu.tip.e reu.ator/ authorities .i1e S&P and Pa1istan &an1in ?ouni.!Jationa.iation po.i/ .ed to poor perormane o overnment-oned $an1sand ored the overnment to revise its nationa.iation po.i/!

?onse3uent./' the nationa.iation at o *974 as amended in *99*! n 2rststep' tent/ three $an1s ere a..oed to operate! ;ut o these' ten $an1s$e.oned to domesti private setor hi.e rests ere o orein setor (>ani ,00+)!

$0$0$ 6on#anking &inancial !nstit"tions 76&!8To increase competition in credit maret! a n"m#er o$ non-#aning $inancial instit"tions %ere

allo%ed to operate. &"rrentl'! more t(an 100 )*F+s are operating in ,aistan. n t(e ot(er (and!

to increase e$$icienc'! mergers and amalgamations are also enco"raged /ani$ 2003.

$0$0( Pri%atization

Privatiation o overnment-oned $an1s as started to enhane ompetitionand eien/ in the $an1in setor! n 2rst stae' to overnment-oned

$an1s name./ Mus.im ?ommeria. &an1 (M?&) and A..ied &an1 Cimited (A&C)ere privatied! The proess o privatiation too1 to /ears! irst' ,I Lshares o $oth M?& and A&C ere o6ered to private setor o..oed $/de.iver/ o 49 L shares o M?& to private setor in *99+ a.on ith ontro.rihts! n *99+' ,5 L shares o A&C ere so.d to "mp.o/ee ManaementBroup a.on ith ontro. rihts! >a$i$ ?redit N "<hane &an1 as u../privatied in *99I! *0 L shares o J&P ere so.d throuh sto1 mar1et!United &an1 Cimited (U&C) as privatied in ,00, and >&C as privatied in,00+!

Jo' there are our overnment-oned $an1s operatin in Pa1istan as

ompared to tent/ private $an1s! t is a.so o$served that ne./ privatied$an1s have improved eien/ ater privatiation! So' 2nania. setor

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$0$0' Capital +arket Reorms

As a part o .i$era.iation proess' apita. mar1et as opened to oreininvestors in *990s! To deve.op an eient and order./ mar1et or orporate$usiness' a redit ratin aen/' PA?A as esta$.ished in *994 as a Doint

venture $eteen nternationa. inane ?ouni.' &?A .imited o United@indom and Cahore Sto1 "<hane! n *994-95' a ?entra. epositor/?ompan/ as ormed to start paper.ess tradin in sto1 e<hane! tai.itated the transer o sto1 onership and redued paperor1 or$ro1erae houses' ustodian $an1s and other 2nania. institutions andredued the ris1 o dup.iation o seurities' oreries' damaes and .oss o seurities!

n *997' Bovernment too1 another step to strenth the apita. mar1et andormu.ated a apita. mar1et deve.opment proram ith he.p o Asianeve.opment &an1! The main purpose o this proram as to enhaneompetition' strenthenin overnane' moderniin mar1et inrastrutureand its .in1aes' deve.opin orporate de$t mar1et' reormin mutua. undindustr/' deve.opin .easin industr/ and promotin ontratua. savinsthrouh reorms o insurane setor and pension unds (>ani ,00+)!

$0( Efect o &inancial ReormsAs the resu.t o these 2nania. reorms' the $an1in setor in Pa1istan hasonverted into a hih./ ompetitive mar1et ith dominane o private setor!

The eien/ has reat./ improved due to these reorms $/ pu$.i $an1s'private $an1s and ne./ privatied $an1s (di Patti N >ard/ ,005)!

CHAPTER (

)iterat"re Re%iew

(01 Ownership;nership imp.ies to .ea. riht o possession! ;ner is a person ho hasto orma. rihts: riht to ontro. 2rm and to ta1e residua. earnin (netinome ater pa/in a.. o$.iations) o the 2rm!

The term orma. is used due to at that orma. (.ea.) ontro. does not mean

e6etive (eonomi) ontro.! n ase o so.e proprietorship' a person an haveu.. ontro. riht and u.. residua. riht hih .eads to u.. onership

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(0$0( Planned Perormance

Perormane an $e measured ith tarets that manaement deve.oped$eore start o period under revie! &ut in order to et useu. resu.tsO p.anned.eve. shou.d $e $ased on rea.isti assumptions!

Jo in order to stud/ the e6et o onership on perormane o oraniations' theor/ o propert/ rihts is disussed here!

(0( Theor, o Propert, Rights The theor/ o propert/ rihts as deve.oped $/ or1s o ?oase (*9+7' *9I0)'A.hian (*987)' emset (*9I4' *9II' *9I7) and uru$otn N PeDovih (*97,'*974)! The theor/ o propert/ rihts is $ased on at that inentives diret

eonomi $ehavior o individua.s and oraniations! deision ma1er hasa$i.it/ to ain return o most eient deision' then he onsiders ever/deision a.ternative' ompares net ain rom eah deision a.ternative andhooses the deision hih produes hihest net ain! Thus the inentivesthat diret $ehavior o deision ma1er are derived rom propert/ rihts o thedeision ma1er!

The theor/ o propert/ rihts onsists o three parts! n 2rst part' onept o propert/ riht and its t/pes are de2ned! n seond part' di6erent a.ternativepropert/ riht s/stems (orms o onership) are e<p.ained! And in third part'assinment o rihts in eah propert/ rihts s/stem (orm o onership) is

e<amined and their e6et on eien/ o resoure uti.iation is studies(?arro.. ,004)!

(0(01 Propert, Right 9e4nition

Propert/ riht is de2ned as a$i.it/ to o$tain return or potentia. reard rom aresoure' to use or modi/ a resoure (uru$otn N PeDovih *97,' *974)!

(0(0$ T,pes o Propert, Rights

The propert/ riht' ho.der o hih has a$i.it/ to o$tain return or potentia.reard rom a resoure is termed as residual right ! The propert/ riht'ho.der o hih has a$i.it/ to use or modi/ a resoure is a..ed control right (?arro.. ,004)!

(0(0( Characteristics o Propert, Rights

Propert/ rihts are usua../ de2ned $/ soia. .as and reu.ations $ut a.sosometimes' $/ soia. traditions and ustoms (uru$otn N PeDovih *97,'*974O emset *9I7)! o..oin are most important harateristis o

propert/ rihts'

2828



• >o .ear./ the rihts are de2ned!

• "<.usivit/ o the rihts!

• Transera$i.it/ o the rihts!

A clearl, de4ned propert/ riht sets the .imits to hih a resoure an $eused or modi2ed! The va.ue o propert/ riht is a6eted $/ .arit/ o itsde2nition! ?.arit/ o its de2nition an inrease or derease va.ue o propert/rihts dependin upon propert/ riht in 3uestion and orm o .ari2ation! ore<amp.e' onin reu.ations in a rea. estate setor ma/ a..o oner o therea. estate to rent his propert/ on./ to sin.e ami./ or tenant $ut not tomu.tip.e tenants! This reu.ation an derease potentia. renta. inome! &ut onthe other side' it an inrease or maintain neih$orhood 3ua.it/ and potentia.resa.e va.ue! t i.. improve va.ue o propert/ riht!

The seond harateristi o propert/ rihts is e:cl"si%it, hih usua../inreases va.ue o propert/ rihts as it a..os on./ to oner o e<.usiverihts to use them' hi.e prohi$itin others! >oever' restritions an $eimposed on e<erise o e<.usive propert/ rihts! or e<amp.e' e3ua.opportunit/ reu.ations an .imit a$i.it/ o oner o a rea. estate to se.. hispropert/ to ertain rae' re.iion or ender!

The third harateristi o propert/ rihts is transerabilit,! Thisharateristi a..os oner o propert/ riht to o$tain return rom theresoure either u../ $/ se..in it or partia../ $/ .easin the rihts! estritionsan $e p.aed on transera$i.it/ o propert/ rihts $/ reu.ations! ore<amp.e' a restrition an $e imposed on inherited propert/ o a heir or aertain period o time or se..in and usinO thus' .imitin his ontro. andresidua. rihts (?arro.. ,004)!

(0(0* Propert, Right 3,stems 7&orms o Ownership8

Propert/ riht s/stems (orms o ;nership) are deve.oped $/ di6erenton2urations o ontro. rihts and residua. rihts ith variations on

harateristis o these rihts! The on2uration o rihts is an assinment o propert/ rihts! There are three enera. propert/ riht s/stems:

• Private propert/ riht s/stem!

• State propert/ riht s/stem!

• Pu$.i or ommuna. propert/ riht s/stem!

n pri%ate propert, right s,stem' $oth ontro. rihts and residua. rihtsare assined to individua.s or oraniations! or e<amp.e' a .and an $e so.d

to individua.s' ami.ies and to oraniations! n private propert/ riht s/stem'oner has $oth ontro. rihts and residua. rihts! >e an e<erise his ontro.

2929



rihts $/ usin or modi/in the propert/ throuh deve.opment! >e ane<erise his residua. riht $/ se..in or .easin the propert/! >oever'reu.ations an redue e<erise o residua. and ontro. rihts! or e<amp.e'onin reu.ations an prohi$it spei2 uses o the resoure' a.terin theontro. rihts! Ta< authorities an inrease residua. ain (via ta< redit or

preservation or ertain 1ind o deve.opment) or derease the residua. aino$tained rom the resoure ($/ imposin ta< on return rom the resoure)!

n state propert, right s,stem' $oth ontro. rihts and residua. rihts areassined to overnment or state! This t/pe o propert/ rihts s/stem e<istedin ormer Soviet Union and an $e o$served toda/ in ?hina and Jorth @orea!;ther e<amp.es o state propert/ riht s/stem are US edera. .ands' to..hiha/s' state and muniipa. par1s' em$assies' nationa.ied industries andother overnment $ui.dins! State onership is not same as pu$.ionership! n state propert/ riht s/stem' state is ranted e<.usive rihts toa resoure and state an .imit aess o pu$.i to the resoure! or e<amp.e'

state an .imit pu$.i aess to mi.itar/ $ases or edera. .ands $/ puttinrestritions on ommeria. ativities! n this riht s/stem' state is a.soranted transera$i.it/ riht! So overnment an se.. or .ease a overnmentpropert/ (?arro.. ,004)! ?hinese state propert/ riht s/stem a..os entra.overnment to distri$ute input to industria. enterprises and set tarets oroutput and pro2t or them (>e ,00,)!

n p"blic propert, right s,stem' ontro. rihts and residua. rihts areassined to a.. mem$ers o ommunit/! t is a pure pu$.i onership! t is anopen s/stem ith .a1 o e<.usivit/! n pu$.i propert/ riht s/stem'e<.usive rihts are not assined to an/ individua.' to an/ oraniation oreven to state! So this propert/ riht s/stem is onsidered as nonpro2t! Thee<amp.es o pu$.i propert/ riht s/stem are atera/s' pu$.i roads andoean 2sheries $e/ond internationa../ areed .imits (?arro.. ,004)!

Tehnia../ pu$.i propert/ riht s/stem is ver/ .ose state propert/ rihts/stem $ut has a .ear demaration! The $est e<amp.e that an $e presentedhere is o pu$.i par1s! State or .oa. overnment deve.ops these par1s ore.are o enera. pu$.i! State tehnia../ has apa$i.it/ to .imit pu$.iaess rom usin pu$.i par1s $/ imposin ee or entrane! this riht isused $/ the state re3uent./ then par1s an $e identi2ed as state-oned

propert/! the state does not use this riht then par1s an $e identi2ed aspu$.i propert/ (A.hian N emset *97+)! So the state and pu$.i propert/riht s/stems di6er $/ pu$.i aess! Another e<amp.e that an $e presentedhere to di6erentiate $eteen state and pu$.i propert/ riht s/stem is thedi6erene $eteen the state and the overnment! The ueen o "n.andrepresents the state hi.e the Prime Minister o "n.and represents thepu$.i! The main di6erene $eteen these to desinations is that pu$.i ane.et the Prime Minister $ut annot e.et the ueen! So these todesinations a.so di6er $/ pu$.i aess! Prime Minister is a po.itia. 2ure$ut ueen o "n.and is a nonpo.itia. 2ure!

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(0(0- Efect o Propert, Right 3,stems onE;cienc,

Third part o propert/ rihts theor/ studies the e6et o riht assinments on$ehavior o deision ma1er' on resoure a..oation and on eien/! Thisana./sis is arried in onte<t o neo.assia. mode. o eient mar1et herethere are no inormation pro$.emsO no transation ost ith peret aent$ehavior and assumes that pro2t ma<imiation is on./ o$Detive o partiipants in the mar1et (uru$otn N PeDovih *97,)! n this mode.' ever/part/ ho i.. $e assined rihts i.. e<erise these rihts in order to inreaseits net ea.th!

Under pri%ate propert, right s,stem' in hih individua.s or oraniationsare assined the rihts' oner o the resoure i.. invest the resoure itho$Detive o neo.assia. pro2t ma<imiation! So the private propert/ riht

s/stem promotes resoure usae and e<hane unti. the resoure ahievesits optima. va.ue! Thereore' the private propert/ riht s/stem a.on ithindividua. pro2t ma<imiation onept in a ompetitive mar1et' promoteseient a..oation o resoures in the eonom/ (emset *9II' *9I7O A.hian*987)!

n state propert, right s,stem' the state deides to invest in state-onedresoures! The eien/ resu.ts i.. not $e same as in private propert/ rihts/stem! n private propert/ riht s/stem' individua. or oraniationa. ea.thma<imiation is o..oed' hi.e in state propert/ riht s/stem' ea.thma<imiation o ho.e soiet/ is o..oed! This outome ou.d re3uire that

state%s deision ma1in proess shou.d re=et and inorporate interests o a..mem$ers o the soiet/! This $e.ie as $asis or ormation o ?ommunistPart/! >oever i state in the state propert/ riht s/stem does not o..opro2t ma<imiation prinip.e or the soiet/' eonomi eien/ in the statepropert/ riht s/stem i.. $e ar .ess than private propert/ rihts/stem(?arro.. ,004)! n state propert/ riht s/stem' most./ po.itia.o$Detives are pursued rather than pro2t ma<imiation o ho.e soiet/(&o/1o' Sh.eier N Fishn/ *99I)! ue to these reasons' the state propert/riht s/stem is eonomia../ .ess eient than private propert/ riht s/stem! The evidenes o this 2ndin an $e seen in reent ?hinese movement romstate-oned enterprises to a shareho.din s/stem (Mi.rom N o$erts *99,O Ee6erson N as1i *994)!

Under the p"blic propert, right s,stem' residua. rihts and ontro. rihtsto a resoure are e6etive./ unassined! ue to .a1 o e<.usivit/ andtransera$i.it/ o propert/ rihts in the pu$.i propert/ riht s/stem' there i..$e minimum investment in ommon propert/ resoures! The reason is thatever/ person or oraniation investin in pu$.i propert/ riht s/stem is notsure o ettin pro2t $a1 and pro2t an o to a di6erent person ho annot$e e<.uded $ut ho has made no investment! Another eien/ imp.iationo pu$.i propert/ riht s/stem is that it promotes overuse o resoures! This

overuse attempts i.. $e made $/ a person ho i.. ahieve pioneer aessto the resoure! n pu$.i propert/ riht s/stem e see Q2rst ome' 2rst serve%

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se. interest $ehavior! So' .a1 o e<.usivit/ in the pu$.i propert/ rihts/stem .eads to .oer outome o the resoure! The e<amp.es o this$ehavior an $e seen in over 2shin in oeans' overrain in ranes andover harvestin in tim$er! These t/pes o responses to pu$.i propert/ rihts/stem redue va.ue o resoure to the ommunit/ .eadin to ineient

outome (?arro.. ,004)!

The deve.opment o di6erent propert/ riht s/stems and resu.tin eien/o these propert/ riht assinments are hih./ re.ated! emste (*9I7) hasproved that deision to a.ter these propert/ riht s/stems depends upon ostand $ene2ts o doin so! A.terin a propert/ riht s/stem is ost./ as itinvo.ves deve.opment o ne .as and traditions that are aepta$.e tomem$ers o ho.e soiet/! #hen va.ue o a resoure is haned $/ onsumerpreerenes and mar1et demands' va.ue o hanin a propert/ riht s/stemis a.so haned! n this a/' hiher va.ue o resoure ma/ $e ahieved hihis reater than ost o a.terin the propert/ riht s/stem!

va.ue o a resoure in pu$.i propert/ riht s/stem is inreased then thepu$.i propert/ riht s/stem an $e evo.ved to the state propert/ rihts/stem! This an $e o$served amon nationa. overnments throuh treatiesthat assin oasta. rihts to protet oean 2sheries! A.ternative./' the pu$.ipropert/ riht s/stem an $e evo.ved to private propert/ riht s/stem orprotetionism! The e<amp.e is provided $/ emset (*9I7) o Jorthestndians ur tradin ativities to prevent e<essive huntin o anima.s $/outsiders! esoure va.ue an a.so $e haned due to some e<oenouse6ets! #hen va.ue o resoure dereases so muh that enorin a privatepropert/ riht s/stem is more ost./ than its orth' private propert/ rihts/stem an $e evo.ved to pu$.i propert/ riht s/stem! An e<amp.e an $epresented here o a$andoned housin in ur$an areas here propert/ va.ueshave sini2ant./ de.ined (?arro.. ,004)!

(0* &actors Responsible or9iferential Perormance

As it is evident rom the theor/ o propert/ rihts that pu$.i oraniations

are .ess eient in resoure uti.iation than private oraniations' nodi6erent ators are disussed here hih are .in1ed ith di6erent onershiporms and are responsi$.e or di6erentia. perormane o pu$.i and privateoraniations!

(0*01 The Efect o !ncenti%es

Propert/ rihts that in.ude the riht to ontro. a resoure and the riht to etreturns rom a resoure' provide $asis or eient deisions o individua.sho have ea.th ma<imiation as on./ o$Detive in their mind! ?onse3uent./'

an individua. or an oraniation that ho.ds propert/ rihts i.. invest theresoures in suh a a/ to produe hihest returns! There is an inentive to

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There are to p.ausi$.e e<p.anations or poor perormane o pu$.ioraniations versus private oraniations! irst shoo. o thouht arues thatpu$.i oraniations have a soia. and deve.opmenta. ro.e hih ma1es themsoia../ pro2ta$.e $ut 2nania../ unpro2ta$.e (Sti.it *994)! Those ho areritia. to this thouht are supporters o pu$.i hoie theor/ and arue that

pu$.i oraniations are ontro..ed $/ po.itiians ho use them or theirpo.itia. o$Detives and as a resu.t eien/ o pu$.i oraniations is .oeredthan private oraniations (Ca Porta' Cope-de-si.anes N Sh.eier ,00,)!

Public Choice Theory studies eonomi $ehavior o non-mar1et deisionma1ers .i1e po.itiians' voters and $ureaurats and assumes that man is aneoist' rationa. and uti.it/ ma<imier (Mue..er *97I) and onse3uent./suests that overnment ministers and ivi. servants have di6erent oa.sthan pro2t ma<imiation and the/ e<hi$it individua. uti.it/ ma<imiin$ehavior! The/ are invo.ved in inreasin their vote $an1 and ahievin$udet ma<imiation o$Detives .eadin to aste and ineienies (Sh.eier

N Fishn/ *994)!

Po.itiians inrease their vote $an1 and po.itia. support in num$er o a/shih in turn .oer perormane o pu$.i oraniations as ompared toprivate oraniations! Most ommon./ used strate/ $/ po.itiians or thispurpose is e:cess spending! "<ess spendin is used $/ po.itiians toinrease their po.itia. support and usua../ avor riends o overnment! Cot o evidenes a$out e<ess spendin is ound in .iterature! Studies usin $an1.eve. data have ound that .endin $ehavior o $an1s is a6eted $/ po.itia.environment! Sapiena (,004) did a stud/ on ta.ian $an1s and ound that.endin $ehavior o $an1s is a6eted $/ e.etora. resu.ts o po.itia. part/a.iated ith the $an1! @haDa N Mian (,005) ound that pu$.i $an1s inPa1istan avor those 2rms that have po.itia../ onneted diretors in terms o more .endin and hiher deau.t rate! in (,005) used $an1-.eve. data o +Iountries and ound that .endin $ehavior o $an1s in emerin mar1ets isa6eted $/ e.etions! ?redit C/onnais' a deau.tin renh $an1' made orse.oans to riends o ru.in soia.ist part/ (&o/1o' et a. *99I)!

Mio et a. (,005) ound that di6erene in perormane o pu$.i and private$an1s idens durin e.etion /ear $eause pu$.i $an1s inrease their.endin or po.itia. in=uene! >oever' it is o$served that .endin $ehavior

o pu$.i and private $an1s is not a6eted $/ e.etions in industria. ountries!n industria. ountries' pu$.i $an1s ease their deve.opmenta. ro.e anddeve.op ompetin strateies ith private ounterparts hi.e in deve.opinountries pu$.i $an1s ontinue to p.a/ deve.opmenta. ro.e and e<hi$it poorperormane as ompared to private $an1s!

Another strate/ used $/ po.itiians to et po.itia. support and enhane vote$an1 is e:cess emplo,ment! Po.itiians are a$out peop.e hose Do$s are indaner $eause the/ have to ta1e votes rom peop.e in uture! n Pu$.ihoie mode.' there e<ists an e<hane $eteen se.2sh pu$.i and se.2shpo.itiians! Pu$.i ive votes to po.itiians ho ain inome' prestie and

poer hih are .in1ed ith runnin overnment apparatus and in turn

3434



e<pet some soia. and eonomi $ene2ts $a1 rom po.itiians espeia../ theemp.o/ment (Mue..er *97I)!

The po.itiians% interest in e<ess emp.o/ment is derived rom pressure o potentia../ unemp.o/ed pu$.i and .a$or unions hih ena$.e po.itiian to et

votes aa/ rom other po.itiians (&o/1o' et a. *99I)! &ritish overnment or/ears reused to .ose hih./ ineient oa. mine operations to save miners% Do$s and su$sidied these ineient operations! The reason as that theminers% union had sini2ant poer to $rin don the overnment (Sh.eier*998)! onahue (*989) has proved it $/ providin data that pu$.i./ providedmuniipa. servies have hiher emp.o/ment per prodution unit inomparison to their private ounterparts! "<ess emp.o/ment inreasesovernment popu.arit/ and redues po.itia. insta$i.it/!

Another neative e6et o po.itia. patronae is depited $/ @rueer (*990)ho arued that pu$.i enterprises are pressuried to hire po.itia../

onneted persons rather than 3ua.i2ed person hih .ead to poorperormane o pu$.i oraniations as ompared to private oraniations!Senior appointments in pu$.i setor are $ased on po.itia. patronae ratherthan merit hih .ead to .o mora.e in ran1s o tehnora/ in pu$.ioraniations! >eadships o pu$.i setor oraniations are indisriminate./used as po.itia. sineures! "ient manaers ho ai. to satis/ thepo.itiians are transerred hih .eads to poor eien/ in pu$.ioraniations (&ardhan *984: I9-70)! Mr! &!@! Jehru' a ormer ndianam$assador to United States has depited the .ear piture o po.itia. e6etson perormane o pu$.i oraniation $/ notin that pu$.i oraniationsespeia../ in the United States are used to aommodate those poeru.po.itiians' ho annot $e made ministers' ith sa.aries' per3uisites'patronae and opportunities to ma1e mone/ throuh orruption (Marathe*989: *84)!

t is evident rom the disussion that po.itis p.a/s a neative ro.e in theperormane o pu$.i oraniations as ompared to private oraniationhih .eads to poor perormane o pu$.i oraniations as ompared toprivate oraniations $ut soia. and deve.opmenta. ro.e o pu$.i oraniationis inored here as these ro.es do not appear in the $a.ane sheet o oraniations!

An a.ternative provided to redue po.itia. in=uene on pu$.i oraniations isprivatiation proess hih inreases the ost or po.itiians to in=uene thepu$.i oraniations $eause the/ have to ive su$sidies to privateoraniation to remain ineient hih is po.itia../ harder to sustain thanastin pro2t o pu$.i oraniations! So privatiation enhanes the eien/o private oraniations espeia../ hen it is mi<ed ith tiht monetar/ po.i/and ne oner is a pro2t ma<imiin individua. rather than an emp.o/ee or amanaer (&o/1o et a. *99I)!

3535



(0*0( The Efects o <ob Characteristics andOrganizational Climate

t is o$served $/ .iterature stud/ that there an essentia. di6erene e<ists$eteen praties o pu$.i and private oraniations in terms o Do$harateristis and oraniationa. .imate hih urther has e6et on re.ativeperormane o pu$.i and private oraniations! The di6erene $eteenpu$.i and private oraniations evo.ves rom their pattern o onership andundin (#a.ms.e/ N a.d *97+)!

"6etiveness o pu$.i and private oraniations depends upon mathin theinterna. oraniationa. struture to demands o e<terna. tas1 environment! Sountionin in pu$.i and private oraniations depends on di6erentenvironmenta. ontinenies that the/ have to adapt! or e<amp.e' di6erenein these to setors in their riteria o ontro. and aounta$i.it/' .ea. and

po.itia. environment' undin and patterns o onership has diret e6et onthe struture and praties in these to t/pes o oraniation (Thompson*9I,)!

The main environmenta. ators that di6er in these setors are so"rces o "nding and degree to market e:pos"re (Cind$.om *977O #a.ms.e/ Na.d *97+)! n private oraniations' environment is ompetitive and d/namiith pro2t ma<imiation as the on./ o$Detive' hih enores manaers todeve.op eient strateies to meet mar1et and ustomer demands! Thedependene o private setor on mar1et or resoures provides the inentivesand pena.ties that reinore po.iies or ost redution' e6etive perormane

and operatin eien/! Manaers in pu$.i setor oraniations usua../o..o status-3uo' havin mu.tip.e and am$iuous oa.s ith undin throuhappropriation proess hih an $e in=uened $/ po.itia. ores (aine/'&a1o6 N Cevine *978)! ?onse3uent./ eien/ o pu$.i oraniations is.oered than private oraniations!

n private oraniations' manaers are rearded on the $asis o theireien/ to meet the mar1et demands hi.e in pu$.i oraniations'manaers have mu.tip.e and ompetin oa.s to meet ith additiona.onstraints and .oer priorit/ is iven to those po.iies that reard eien/!So.omon (*98I) provided evidene to it! >e too1 intervie o ,40 top

manaers o di6erent pu$.i and private oraniations in srae. and on.udedthat perormane $ased reards and po.iies that promote eien/ aremore prominent in private oraniations as ompared to pu$.i oraniations! The .arest di6erene ound in these to setors as in area o reards/stem! eards ere not distri$uted on $asis o perormane in pu$.ioraniations! The di6erenes $eteen to setors ere more sini2ant ineien/-re.ated areas in.udin improvement o methodo.o/' tas1autonom/' and tas1 .arit/ and reard orientation! urther' he on.uded thatsatisation ith Do$s and oraniationa. harateristis is hiher in privateoraniations than pu$.i setor oraniations! A.. these ators a.so support

private onership or superior perormane in omparison to pu$.ionership!

3636



Another ator that a6ets eien/ o deision ma1er is deree o comple:it, within organization! n ase o so.e proprietorship and sma..partnership 2rms' the .ea. ontro. rihts and .ea. residua. rihts are usua../in hands o same person hih .eads to eient deision ma1in! #hi.e inomp.e< oraniations' .ea. ontro. rihts are assined to deision ma1ers

(manaers) hi.e .ea. residua. rihts are assined to other parties(shareho.ders)! Cea. residua. rihts are .ess e6etive than .ea. ontro. rihtsin deision ma1in proess as .ea. ontro. rihts are in hands o manaerho ma1es deisions! This situation .eads to aen/ issues ithin omp.e<oraniations as deision-ma1ers start disp.a/in uti.it/ ma<imiin $ehaviors(?arro.. ,004)!

Another oraniationa. ator that a6ets omparative perormane o pu$.iand private enterprises is "zziness o owner=s identit,! n privateenterprises' there an $e man/ oners-prinipa.s' so ever/ oner shares osto monitorin ith others (&en-Jer' Montias N Jeu$erer *99+)! n pu$.i

enterprises' oner is a overnment department represented $/ a sin.e ivi.servant ho an e<erise u.. ontro.! So' theoretia../' perormane o pu$.ienterprises shou.d $e $etter than private $eause onership is not di6usedamon man/ oners! &ut overnment department' itse.' is aen/ o itiens' ho are the de-Dure oners o pu$.i enterprises! n other ords' theivi. servant ho is ontro..in pu$.i enterprise himse. is an aent'monitorin other aents and has no inentives to meet their o$Detives!?itiens in a demora/ neither have inentives nor have suient1no.ede to in=uene pu$.i oraniations! As a resu.t' pu$.i onershipe6etive./ $eomes de-ato proprietorship $/ po.itiians and ivi. servants'

hi.e pu$.i manaers ee. themse.ves ree o $oth mar1et disip.ine andsantions rom u.timate prinipa.s! n this atmosphere' overnment deisionma1in proess is surrounded $/ speia. interest and pressure roups hihpressuries $ureaurats to diret overnment resoures to their on speia.interests (MaDumdar *998)! t an $e o$served that aen/ issues are a.sopresent in pu$.i oraniations $ut these are usua../ $eteen po.itiians and$ureaurats (&o/1o' et a. *99I)! So aen/ issues a6et perormane o $oth pu$.i and private oraniations!

;ne o the ators that a6et perormane o emp.o/ees is 5ob sec"rit,! t iso$served that emp.o/ees havin more seure Do$s are more eient than

.ess seure Do$ ho.ders! "<amp.e an $e presented here o Amerian Dudiiar/!t is o$served that seured Dudes are .ess .i1e./ to invo.ve in $ri$e ta1inthan .ess seure Do$ ho.ders! The reason ound is that $ri$e ta1in an .ead todismissa.! a seure Do$ ho.der is auht $/ $ri$e hare' he .oses more/ears o inome than short tenure Dude (Candes N Posner *975)! Eo$ seurit/is hiher in pu$.i than private oraniation! So this ator avors pu$.ioraniations or superior perormane than private oraniations!

(0*0* The Efect o Competition and Reg"lation

?ompetition has e6et on perormane o $oth pu$.i and privateoraniations to same or .esser e<tent! ?ompetition a.ins the $ehavior o

3737



manaers in $oth pu$.i and private oraniations! n pu$.i oraniations'usua../ po.itiians are ontro..in the 2rm! Po.itia. ompetition resu.ts insoia../ eient outomes (#intro$e *987)! Mue..er (*989: ,*4) has more.ari2ed the situation o po.itia. ompetition $/ statin that i voters reardthose po.itiians ho promise them more soia. and eonomi $ene2ts then

ompetition or votes $eteen po.itiians i.. .ead to eient soia. outome Dust simi.ar $/ invisi$.e hands! &ut po.itia. ompetition is not as eient asmar1et ompetition! irst reason o it is that the interation $eteenpo.itiians and pu$.i is not as eient as eonomi ompetition (Mue..er*989:,85)! Seond' Po.itia. ompetition is non prie ompetition (?arro..*990)! n the simi.ar a/' manaers in private 2rms a.so ae ompetitionpressure in the orm o ta1eover $ids and ompetition ith others manaersin the Do$ mar1et (#intro$e *987: 4+9)!

To di6erent vies are ound in .iterature a$out the e6et o ompetition onperormane o onership! irst roup o sho.ars ho are supporters o

arument Qprima/ o ompetition versus onership% has arued thatompetition in produt mar1ets is more important determinant o eien/than onership o oraniation! #hen ompetitive produt mar1ets arenormative./ appropriate i!e! there is no produt mar1ets ai.ure thenonership does not matter! There is no di6erene in eien/ o pu$.i andprivate oraniations! t is on./ the ompetition that drives perormane o pu$.i and private oraniations! The main arument put $/ these sho.ars isthat aen/ issues are present in $oth pu$.i and private oraniations!Aen/ issues arise in pu$.i oraniations due to .a1 o aounta$i.it/(#hitehead *988)! #hi.e in private oraniations' aen/ issues arise due to

separation in onership and ontro. (ama N Eensen *98+)! So' there isinherent./ no reason to onsider that private oraniations are a.a/ssuperior in perormane than pu$.i oraniations!

Man/ evidenes have $een ound in support o this arument! Man/researhers have arued that even private oraniations do not adoptstrateies to improve perormane in ea1./ ompetitive or in hih./reu.ated industries (@a/ N Thompson *98I)! n ea1./ ompetitive mar1ets'private oraniations a.so $ehave .i1e monopo./ and manaement eien/is not improved stron./ (Brosse N Kanes *998)! So in ea1./ ompetitivemar1et' pu$.i monopo.ies and private monopo.ies are $oth onsidered as

ineient (Fi1ers N Karro *988O @a/ N Thompson *98I)! Some evidenesare ound that pu$.i and private oraniations ain simi.ar ompetitiveenvironment do not sho an/ eien/ di6erene (?aves N ?hristiansen*980)! or e<amp.e' $eteen pu$.i and private oraniations ainsuient ompetition ithout an/ disrimination reu.ations and su$sidies'unit ost di6erenes are insini2ant (&orherdin' Pommerehne N Shneider*98,)! #ith the inrease in ompetitive riva.r/' strateies to ae ompetition$eome important or $oth pu$.i and private oraniations! The ompetitionin the mar1et e<erts pressure on pu$.i oraniations to redue ost and toremove disretionar/ $ehavior o $ureaura/ and onse3uent./ pu$.ioraniations an $e more pro2ta$.e than private oraniations (Spann

*977)!

3838



t an $e on.uded here that the introdution o ompetition in produtmar1et an e.iminate the need o privatiation! This arument as supported$/ Meinson et a. (*994)! The/ itnessed that state-oned enterprises thatere privatied in nonompetitive environment did not sho an/improvement in returns on sa.es! >oever' improvements ere dramati

here privatiation as arried in a ompetitive environment! So deree o ompetition and e6etiveness o reu.ator/ po.i/ have more e6ets thanonership (Fi1ers N Karro *988)!

Jo the 3uestion raises that in simi.ar ompetitive environment hih atorsan $e responsi$.e or the di6erentia. perormane o pu$.i and privateoraniations! This 3uestion is ansered $/ MaDumdar (*998)! >e e<p.ainedthat ith simi.ar ompetition' pu$.i and private enterprises an di6er inperormane $ased on their institutiona. environment! The hoie o institutiona. environment is a6eted $/ orm o onership! So onershipannot $e ru.ed out! This on.usion is in aordane ith seond roup o

sho.ars!

Seond roup o sho.ars arues that ompetition has e6et on perormaneo onership $ut onership sti.. matters! &oardman N Finin (*989) ho$e.on to seond roup o sho.ars eva.uated 2t/-our studies a$outomparative perormane o pu$.i and private oraniationsO si< studiesrevea.ed that pu$.i oraniations are more eient than privateoraniations! Si<teen studies on.uded that there is no perormanedi6erene $eteen pu$.i and private oraniations hi.e thirt/-to studiesrevea.ed that private oraniations are more eient than pu$.ioraniations! These mi<ed resu.ts provided ea1 support to theor/ o propert/ rihts and pu$.i hoie .iterature hih are main./ supporters o superior private perormane in omparison to pu$.i oraniation!

As &oardman N Finin (*989) ound mi<ed resu.ts then there shou.d $eurther e.a$oration that hat are the onditions in hih orm o onershipa6et oraniationa. perormane (amasam/ ,00*)! n rep./ to this3uestion' &oardman N Finin (*989) urther arued that mi<ed resu.ts ereound due to to reasons: 2rst' these studies ere arried out innonompetitive environment (monopo.ies or duopo.ies) and the seondOthese studies ere arried out in hih./ reu.ated servie setor! So the/

on.uded that the theor/ o propert/ rihts does not or1 e.. innonompetitive environment or in hih./ reu.ated servie setor! n order toprove the .atter statement' &oardman N Finin (*989) eva.uated theperormane o 500 .arest non-US industria. orporations o the or.d in aompetitive environment and on.uded that mi<ed and state-onedoraniations perorm orse than private oraniations! So onershipmatters! >oever' ompetition moderates the re.ationship $eteenonership and perormane! n hih./ ompetitive situation' their di6erentia.perormane inreases ith inrease o ompetitive intensit/ (amasam/,00*)!

urther to rep./ the aruments o 2rst roup o sho.ars' &oardman N Finin(*99,) arued that a.thouh aen/ issues are a.so present in private

3939



oraniations hih .ead to poor perormane $ut private oraniations are o to t/pes! Aen/ issues are dominant in those private oraniations that areontro..ed $/ manaers hi.e aen/ issues are a$sent in oner ontro..edprivate oraniations! So hen perormane resu.ts o $oth t/pes o privateoraniations i.. $e mi<ed' eien/ resu.ts i.. $e $etter in avor o private

oraniations as ompared to pu$.i oraniations!

(0- Comparing P"blic %ers"sPri%ate Perormance Evidences

Previous studies on omparative perormane o pu$.i and privateoraniations provided e3uivoa. resu.ts! Some studies avor pu$.ionership or superior perormaneO some avor private onership hi.esome on.uded that onership does not have an/ e6et on perormane!

irst' empiria. 2ndins o those studies are presented that avor privateonership! A stud/ onduted $/ MaDumdar (*998) to eva.uate theomparative perormane o overnment oned' mi<ed and privateenterprises ith the he.p o ata "nve.opment Ana./sis in ndia or the periodo *97+-*974 N *988-*989 and on.uded that overnment onedenterprises are .ess eient than mi<ed and private enterprises! Mi<edenterprises on their turn are .ess eient than private enterprises! A stud/onduted $/ eitun N Tian (,007) revea.ed that ith inreasin overnmentshares in a 2rm in Eordan' perormane o that 2rm is .oered a.on ith.oerin o ris1 o deau.t! &a1<' ?arne/ N BedaD.ovi (,00,) studiedomparative perormane o pu$.i' private and mi<ed orporations in air.ineindustr/ and on.uded that pu$.i enterprises under-perorm their privateounterparts hi.e mi<ed enterprises perorm $etter than pu$.i enterprises$ut perorm orse than private enterprises! @um$ha1ar N >Da.marsson (*998)studied omparative eien/ o pu$.i and private e.etriit/ retai.distri$ution in Seden and on.uded that re.ative eien/ o privateenterprises is hiher than pu$.i enterprises! onahue (*989) arried asurve/ o mu.tip.e studies and proved that pu$.i provision o muniipa.servies is o hiher ost than private servies in the United States! Mue..er(*989) arried a surve/ o man/ studies re.evant to omparative perormane

o pu$.i and private enterprises and ound that private enterprises havehiher eien/ than pu$.i enterprises! Mio et a. (,005) on.uded thatstate-oned $an1s .oated in deve.opin ountries have .oer pro2t thanprivate $an1s! The/ ou.d not 2nd an/ re.ationship $eteen onership andperormane in industria. ountries! amasam/ (,00*) eva.uated theperormane o **0 state-oned and private oraniations in terms o pro2ta$i.it/ and operatin eien/ or a three /ear period (*990-*99,) inndia and ound that state-oned oraniations perorm poor than privateoraniations!

Some studies ound .itt.e or no re.ationship $eteen onership and

perormane! iueira' Je..is N Par1er (,009) onduted a stud/ toinvestiate the e6et o onership on $an1 eien/ in Catin Ameria! The/

4040



used a rane o 2nania. and eonomi ratios' ata "nve.opment Ana./sisand reression mode..in and stud/ revea.ed that there is .itt.e di6erene inperormane o pu$.i and private $an1s! A stud/ as onduted $/ Ciu(*995) on omparative perormane o pu$.i and private ports in &ritain andon.uded that no onership e6et as ound on perormane! A stud/

onduted $/ "stahe N ossi (,00,) on.uded that there is no perormanedi6erene $eteen pu$.i and private ater ompanies in Asia! A stud/onduted $/ A.tun$as' "vans N Mo./neu< (,00*) on Berman $an1inindustr/ on.uded that there is .itt.e evidene that private $an1s are moreeient than pu$.i setor $an1s! #hi.e $oth setors too1 $ene2t romeonomies o sa.e' ineien/ measure shoed that pu$.i $an1s have .itt.eost and pro2t advantae over private $an1s! &ha/a (*990) used annua.surve/ o industries data or the /ears *98*-*98, to *985-*98I in ndia andmeasured perormane o pu$.i and private oraniations and on.udedthat pu$.i manaement eien/ is not inerior to private manaement!Simi.ar t/pe o stud/ as onduted in ndia $/ Eha N Sahni (*99,) andon.uded that there is no eien/ di6erene $eteen pu$.i and privatesetors! >oever' pu$.i setor oraniations ere ound .ess pro2ta$.e asompared to private oraniations!

(0. Preerences or P"blic andPri%ate Ownership

t is evident rom .iterature revie that hen e ompare perormane o

pu$.i versus private 2rms then mi<ed resu.ts are ound a.thouh resu.tsavor omparative./ more or private onership as depited $/ &oardman NFinin (*989)! Jo the situations shou.d $e disussed to here pu$.ionership shou.d $e preerred over private onership and vie versa!

Sh.eier (*998) depited these situations $/ e<emp.i/in interestinsituations! Private onership is preerred over pu$.i onership hen there isa stron inentive to innovate and to redue ost! n private onership thereis an inentive to innovate $eause oner i.. et a.. the $ene2ts o thatinnovation! #hi.e this inentive is attenuated in pu$.i onership $eausepu$.i manaers do not have an/ residua. rihts! "ien/ o private 2rms is

a.so hiher than pu$.i 2rms $eause the/ do not have an/ soia. oa.s andthe/ invest on./ in those areas here the/ an earn pro2ts! "<amp.e an $epresented here o de.iver/ o posta. servie to remote or sparse./ popu.atedareas! t ou.d $e unpro2ta$.e to invo.ve in this 1ind o operations or private2rms (Tierne/ *988)!

overnment 1nos hat to produe e<at./ then there is no di6erene inontratin ith private 2rm or doin in-house prodution! Bovernment anma1e ontrat ith a private supp.ier and has a$i.it/ to enore the ontrat!Bovernment an $ind private 2rms to de.iver posta. servie to remote areasor a.ternative./ an reu.ate these 2rms hen entr/ is ree! #ith situation o peret ontratin and reu.ation' there is no di6erene $eteen pu$.i andprivate provision o servies!

4141



The main o$Detive o pu$.i onership is to ahieve soia. oa.s and e<hi$ita deve.opmenta. ro.e in soiet/! #hi.e o$Detive o private onership is toearn more pro2t! The ai.ure o private onership to meet soia. oa.s an $eaddressed $/ overnment ontratin ithout resortin to pu$.i onership!

&ut this is not a.a/s the situation! Bovernment annot u../ antiipate'reu.ate or enore the ontrats ith private 2rms! The e<amp.e is provided$/ deve.opment o inomp.ete ontrat theor/ $/ Brossman N >art (*98I)'>art N Moore (*990)' and >art (*995)! These authors spei/ the idea thatonership ives ontro. and $arainin poer to the oner! ?onse3uent./oner i.. invest in suh a a/ to reap more $ene2ts rom his assets! ontrats do not spei/ hat to produe then oner has stron inentive toprodue that produt hih redues ost or innovate the a/s to et morepro2t! n this situation pu$.i onership shou.d $e preerred over privateonership!

Sti..' there are other ompetin ators that an a.in $ehavior o privateonership! o..oin e<amp.e i.. e<p.ain this interestin situation! Privateshoo.s an hire .ess e<periened and heaper teahers to redue ost $uttheir eien/ and 3ua.it/ i.. $e .oered! n this ase' stron inentive .eadsto ineien/! ;n the other hand' pu$.i shoo.s do not have inentive toredue ost and 3ua.it/ and $eomes eient! ?onse3uent./ sot inentive.eads to eient outome! Sti..' pu$.i onership does not have inentive toinnovate! >oever' ompetition $eteen shoo.s an provide more hoies toonsumers and the/ an sith shoo.s i the/ are dissatis2ed! This ou.de<ert pressure on private shoo.s to not to o..o ost redution strate/!Another ator that pushes them to not to redue ost is reputation $ui.din! the/ ant to maintain their ustomers and ant to have more ustomers inuture' the/ have not to sari2e 3ua.it/! A.so' the ase or private onership$eomes stroner hen po.itia. patronae and orruption are a.so $rouhtinto p.a/!

There is another private a.ternative to pro2t ma<imiin supp.ier! Jonpro2t2rms use enerated surp.us to improve .ives o their emp.o/ees and even toimprove 3ua.it/ hen the/ are soia../ motivated (#eis$rod *988)! n thisa/ nonpro2t private 2rms i.. $e more eient than overnment or or-pro2t private 2rms (B.aeser N Sh.eier *998)!

Pu$.i onership is preerred hen ost redution .eads to non-ontrati$.edeterioration o 3ua.it/' innovation is re.ative./ unimportant' ompetition andreputation mehanisms are ea1 and onsumer hoie is ine6etive!"<amp.e an $e presented here o operatin Air ore ;ne' the p.ane thatarries the President o the United States! Seurit/ o President is importantenouh to enore supp.ier to maintain 3ua.it/ o servie and not to redueost throuh ue. savin $/ usin ris1ier routes! nnovation and reputation o supp.ier is unimportant in this ase! President annot readi./ sith supp.ier i p.ane is not read/ on short notie! ue to these reasons' pu$.i onership o servie is preerred in this ase over private onership (Sh.eier *998)!

4242



rom the disussion it is evident that a.thouh eien/ o private onershipis $etter than pu$.i onership' sti.. there are situations here pu$.ionership shou.d $e preerred over private onership! So pu$.i onershipan not $e tota../ ru.ed out!

CHAPTER *

Research +ethodolog,

*01 Research Philosoph,esearh phi.osoph/ is the a/ $/ hih 1no.ede is deve.oped and Dudedas $ein aepta$.e and it a6ets the route e hoose in doin researh(Saunders' Ceis N Thornhi.. ,00+)! Positivism researh phi.osoph/ is adoptedin this researh! Positivism phi.osoph/ or1s ith o$serva$.e soia. rea.it/and end produt is .a-.i1e enera.iation simi.ar to those produed $/ph/sia. and natura. sientist (Saunders et a. ,00+)! This researh app.ies.oi o 1no.ede $ased on armation o theories' throuh e<tensive

.iterature revie and supported $/ strit sienti2 methods! &/ usinpositivism approah' this researh dea.s ith the $e.ie that sienesometimes inorporates ne ideas that are disontinuous rom the o.d ones!t is the o$Detive o this stud/ to searh or ne empiria. resu.ts onsiderinthe ommon ones!

*0$ Research ApproachA dedutive researh approah is app.ied in this stud/! n dedutive approah'a theor/ and su$se3uent./ a h/pothesis are deve.oped and researh strate/

is desined to test the h/pothesis! There are important harateristis o dedutive approah! irst' it searhes to e<p.ain asua. re.ationships $eteenvaria$.es! Seond' onept needs to $e operationa.ised in a a/ that ena$.esats to $e measured 3uantitative./! ina. harateristi is enera.iation! norder to ma1e enera.iation' samp.e o suient numeria. sie shou.d $ese.eted (Saunders et a. ,00+)! This stud/ is $ased on the revies o theories.i1e theor/ o propert/ rihts and pu$.i hoie theor/! urther on.usionstatement o these theories i!e! private onership is superior in perormanethan pu$.i onership' is ta1en as h/pothesis to test these theories in$an1in setor o Pa1istan! ;n the $asis o empiria. 2ndins o perormaneana./sis and stud/ o po.itia. in=uene on pu$.i $an1s' h/pothesispresented $/ these theories is on2rmed or reDeted!

4343



*0( Research 3trateg,?ase stud/ researh strate/ is app.ied in this researh! o$son (,00,)de2nes ase stud/ as strate/ or doin researh hih omprises an

empiria. investiation o a partiu.ar ontemporar/ phenomenon ithin itsrea. .ie onte<t usin mu.tip.e soures o evidene! ?ase stud/ strate/ isorthhi.e a/ o e<p.orin the e<istin theor/! A e..-strutured theor/ anena$.e us to ha..ene an e<istin theor/ and provide insiht or neh/pothesis! This researh has hosen $an1in setor in Pa1istan as asestud/ to test the theor/ o propert/ rihts and pu$.i hoie theor/! urther'this stud/ is .onitudina. and e<p.anator/ as it ompares perormane o pu$.i and private $an1s or the /ear ,005 to ,009 and e<p.ains there.ationship $eteen to varia$.es i!e! onership and perormane!

*0* 3ample 3election This stud/ is arried out in ontro..ed environment so that re.ia$.e resu.ts areo$tained in the onte<t o e6et o onership! ndustr/ ator is ontro..ed asa.. the samp.es $e.on to $an1in setor! n order to ontro. ators o $an1sie and $an1 e<periene' $an1s o simi.ar sie (num$er o $ranhes) andhistor/ (num$er o /ears in .oa. 2nania. mar1et) are se.eted! There areour pu$.i and tent/ private $an1s in Pa1istan! ;ne o the pu$.i $an1s isver/ sma.. and has presene main./ in one provine' so it is e<.uded romthe samp.e! ?onse3uent./ three pairs o $an1s are se.eted! This stud/

hooses same sied or near./ same sie pairs o $an1s (one rom pu$.i andother rom private setor) so that sie o $an1 ou.d not a6et its resu.ts! norder to remove the e6et o privatiation' those $an1s are se.eted that areithin their respetive setor or the .ast at .east 2ve /ears! ?ountr/ ator isa.so ontro..ed as a.. samp.e $an1s are domesti $an1s in Pa1istan! ue toontro. o ountr/ ator' a.. $an1s are ain simi.ar ompetitive ores!o..oin pairs o $an1s are in.uded in the stud/!

Pairs Jame o &an1 Seto

r

Kear o

"sta$.ishment

Jum$er o

&ranhes

&irst Pair >a$i$ &an1 Cimited Private

*947 *450

Jationa. &an1 o Pa1istan

Pu$.i

*949 *,50

3econd

Pair

&an1 A. >a$i$ Cimited Priva

te

*99* ,I5

4444



The &an1 o PunDa$ Pu$.i

*989 ,7+

Third Pair At.as &an1 Cimited Private

*990 +,

irst #omen &an1Cimited

Pu$.i

*989 +8

Ta$.e-4!* Samp.e Pairs

Soure: State &an1 o Pa1istan ,0*0 N e$sites o respetive $an1s

(Appendi< A)

*0- 9ata CollectionAs *st 3uestion is oin to $e so.ved ith he.p o ratio ana./sis or data derivedrom $a.ane sheets and inome statements' so $a.ane sheets and inomestatements (or the /ear ,005 to ,009) o se.eted samp.e o $an1s areo..eted rom e$sites o respetive $an1s! &a.ane sheets and inomestatements are ana./ed and edited to remove dou$.e entries and to e<.udesu$sidiaries data (i an/ $an1 has su$sidiar/ $usiness)! ,nd 3uestion is

ansered $/ ana./in empiria. 2ndins enerated $/ ratio ana./sis! +rd

3uestion re3uires stud/in .endin $ehaviour and net interest marinshared $/ pu$.i and private $an1s' so it uses annua. reports o respetive$an1s!

*0. 2"antitati%e Anal,sis This stud/ eva.uates omparative perormane o pu$.i and private setor$an1s to 2nd the e6et o onership on $an1in perormane! n $an1in

perormane stud/' inter-$an1 ana./sis is muh ommon (sa$i *99I)!Perormane o a $an1 an $e $etter understood $/ ana./sis o inter-$an1omparison! Farious parametri and non-parametri approahes are used tomeasure $an1in perormane! This stud/ uses ratio ana./sis or inter-$an1perormane omparison! atio ana./sis is used most./ $/ $an1 reu.ators(Sa$i *99IO Samad *999O Spind.er *99*)! The most important $ene2t o ratioana./sis is that it removes $an1 disparities! A.. $an1s are not e3ua. in sie! The use o ratio ana./sis ompensates the disparities in sies (Samad *999)!

atio ana./sis (*, ratios are used) is app.ied to a.u.ate pro2ta$i.it/'.i3uidit/' so.ven/ and eien/ o eah $an1! Then or eah ratio' averae

ratio o three $an1s is a.u.ated or eah setor! Then ever/ averae ratio o $oth setors is ompared in orm o ta$.e and raph! rom the resu.ts' it is

4545



eva.uated that hih $an1in setor is more so.vent' more .i3uid' morepro2ta$.e and more eient! t e<p.ains that hih o these to onershiporms enerates $etter perormane resu.ts! As ever/ ratio is a.u.ated orthe .ast 2ve /ears or eah $an1' trends in omparative perormane o eahsetor are a.so visi$.e rom the raphs!

These ratios ather di6erent perormane measures o $an1s' on the $asis o hih these are divided into our ateories!

*0.01 Pro4tabilit, Ratios

These ratios are used to assess a$i.it/ o a $usiness to earn pro2t inomparison ith a.. its e<penses durin a spei2 time period! Benera../'aountin pro2t is the di6erene $eteen revenue and ost (oss'#ester2e.d N Ea6e ,005)! these ratios are hiher than ompetitors' industr/

averaes or previous /ears% ratio then it an $e onsidered that 2rm isperormin pro2ta$./! o..oin pro2ta$i.it/ ratios are used in this researh!

Return on Assets (ROA):

;A ives pro2ta$i.it/ on assets o the 2rm ater meetin a.. e<penses andta<es! t measures the pro2t o the 2rm ater ta< or eah do..ar invested inassets (>orne N #ahoi ,005)! t is indiator o manaeria. perormane!So' hiher va.ue o this ratio means $etter manaeria. perormane (oss'#ester2e.d N Ea6e ,005)! ;A an $e inreased $/ inreasin pro2t marinor asset turnover!

;A R Jet Pro2t G Tota. Assets

Return on Equity (ROE):

eturn on e3uit/ represents pro2ta$i.it/ o shareho.ders o the 2rm atermeetin a.. e<penses and ta<es (>orne N #ahoi ,005)! ;" is netearnin per do..ar e3uit/ apita.! >iher ;" means $etter manaeria.perormane! &ut hiher ;" an $e due to 2nania. .everae! So hiher.everd 2rms have hiher ;" hih inreases ris1 too (oss' #ester2e.d N Ea6e ,005)! Usua../ ;" is hiher or hih roth ompanies!

;" R Jet Pro2t G Shareho.ders% "3uit/

Yield on Earning Assets (YOEA):

This ratio represents earnin perentae o earnin assets! >iher theratio' hiher is return o $an1 to earnin assets! This ratio an $e usedas pro</ o net ineterest marin!

E )et +nterest +ncome Earning ssets

4646



*0.0$ )i>"idit, Ratios

Ci3uidit/ ratios measure a$i.it/ o the 2rm to meet its short-term (.ess than a/ear) o$.iations and revea. short-term 2nania. strenth and ea1ness(oss' #ester2e.d N Ea6e ,005)! >iher .i3uidit/ ratio means $an1 has hiher

marin o saet/ and a$i.it/ to meet its short-term o$.iations! Savinaounts and tranations deposits an $e ithdran at an/ time and $an1aes .i3uidit/ pro$.em hen ithdraa. e<eeds ne deposits over a shortperiod o time (Samad N >assan ,000)! o..oin .i3uidit/ ratios are used!

Cash to e!osit Ratio (CR):

This ratio measures ash ho.din $/ ommeria. $an1s! ?ash is most .i3uidasset in $an1s! The purpose o this ho.din is to meet demands o ithdraa. rom depositors! t is important in maintainin ustomertrust! &ut on the other hand' it redues opportunit/ to earn inomerom ash!

& Total &as( /oldings Total eposits

"oan to e!osit Ratio ("R):

Coan to deposit ratio is an important indiator o .i3uidit/ position o the $an1!Coans means advanes or onventiona. $an1s! &an1 ith .oer C isonsidered to have e<essive .i3uidit/' potentia../ .oer pro2t and hene .essris1 as ompared to $an1 o hiher C!

C R Coans G Tota. eposits

"oan to Asset Ratio ("AR):

t is another important measure o .i3uidit/ position o the $an1! CAmeasures .i3uidit/ o $an1 in terms o its assets! >iher the ratio' .ess .i3uid isthe $an1!

CA R Coans G Tota. assets

*0.0( 3ol%enc, and Risk Ratios These ratios are a.so a..ed 2nania. earin' de$t or 2nania. .everaeratios! These ratios measure ris1 and so.ven/ o 2rms $/ determinin homuh the 2rm depends on de$t 2nanin rather than e3uit/ apita.! Theseratios determine the pro$a$i.it/ that the 2rm deau.t on its de$ts! Breater thede$ts' reater is the pro$a$i.it/ that the 2rm i.. $eome una$.e to u.2.. itsontratua. o$.iations .eadin to $an1rup/ and 2nania. distress! A.thouhde$t is important soure o 2nanin and provide sini2ant ta< advantae$ut it ma/ reate on=it o interest $eteen de$tors and shareho.ders (oss'#ester2e.d N Ea6e ,005)! amount o assets he.d $/ a 2rm is reater than a..

t/pes o .ia$i.ities then 2rm is onsidered so.vent! o..oin ratios are used tomeasure so.ven/!

4747



e#t$Equity Ratio (ER):

This ratio measures the e<tent to hih a 2rm uses de$ts! t measures a$i.it/o a 2rm to a$sor$ 2nania. sho1! reditor o the $an1 deau.ts in pa/in$a1 .oans or assets va.ue dereases' $an1 apita. provide shie.d aainst

those .oan .osses! A $an1 ith .oer " is onsidered $etter than $an1 ithhiher "!

" R Tota. e$t G Shareho.ders% "3uit/

e#t to %otal Assets Ratio (%AR):

t measures amount o de$ts the 2rm uses in 2nanin its tota. assets! t isindiator o 2nania. strenth o the $an1 and ives inormation a$outso.ven/ o the $an1! >iher TA means that $an1 uses more de$t 2naninthan e3uit/ apita. hih .eads to ris1/ situation!

TA R Tota. e$t G Tota. Assets

Equity Multi!lier (EM):

t indiates amount o assets per do..ar o shareho.ders% e3uit/! >iher va.ueo it shos that $an1 has used more de$ts to onvert into assets ith shareapita.! >iher va.ue o "M .eads to ris1/ situation!

"M R Tota. Assets G Shareho.ders% "3uit/

*0.0* E;cienc, or Acti%it, Ratios

"ien/' ativit/ or turnover ratios measure eien/ in assets or resouremanaement! These ratios measure overa.. e6etiveness o the 2rm inuti.iin its assets to enerate sa.es' 3ua.it/ o reeiva$.es and suess ino..etion' e6etiveness o inventor/ manaement praties and eien/ o the 2rm in ontro..in its e<penses! o..oin ratios are used to measureeien/ o samp.e $an1s!

Asset &tili'ation (A&):

This ratio measures ho eient./ the 2rm is uti.iin its assets! >iherva.ue o this ratio means that 2rm is usin its assets eient./ ineneratin tota. revenue! Coer va.ue o it means that 2rm shou.deither inrease its revenue or dispose some o its assets (oss'#ester2e.d N Ea6e ,005)! Tota. revenue o a $an1 an $e de2ned asnet spread $eore provision p.us a.. other inomes!

sset tiliation Total een"e Total ssets

nome E*!ense Ratio (ER):

t measures amount o inome earned per do..ar o operatin e<penses! Thisis most ommon./ used ratio in $an1in setor to measure manaeria.

4848



eien/ in eneratin tota. inome hi.e ontro..in its operatin e<penses!>iher " is preerred over .oer ones! Tota. inome is net spread earned$eore provision p.us a.. other inome!

" R Tota. nome G Tota. ;peratin "<penses

O!erating E++iieny (OE):

This ratio measures amount o operatin revenue per do..ar o operatine<pense! t provides inormation a$out manaeria. eien/ in eneratinoperatin revenues and ontro..in its operatin e<penses! n other ords'ho eient is the $an1! >ih ;" is preerred over .oer ;"!

;" R Tota. ;peratin evenue G Tota. ;peratin "<penses

*0' 9etermination o Political!n?"ence

Po.itia. in=uene on pu$.i $an1s is determined $/ to a/s in thisresearh! irst' it is o$served that i there is an/ e6et o e.etions onomparative perormane o pu$.i and private $an1s! So the e6et o e.etions on perormane o these $an1s or a.. the te.ve ratios isdisussed! Seond' it is o$served that i there is an/ hane ours in.endin $ehavior o pu$.i and private $an1s durin the e.etion /ears!

n Pa1istan .ast enera. e.etions ere he.d in 2rst 3uarter o ,008! So'po.itia. in=uene an $e o$served in the /ear o ,007 or ,008!

"6et o e.etions on omparative perormane o pu$.i and private $an1s iso$served in .iterature! Mio et a. (,005) ound that pu$.i $an1s have .oerpro2ta$i.it/ than private $an1s and their di6erentia. perormane idensdurin e.etion /ear in deve.opin ountries! Simi.ar./' .endin $ehaviour o $an1s is studied to determine po.itia. in=uene on pu$.i $an1s! n order toiso.ate po.itia. in=uene rom other drivers o perormane' .endin $ehavioro private $an1s is a.so o$served! n this a/ a.. other ators $eomeonstant! Usua../ pu$.i $an1s inrease .endin $eore the e.etions in avor

o riends o overnment to inrease po.itia. support o overnment!

This inrease in .endin an $e due to demand sho1 o .oans! To identi/ thisinrease on .oan due to po.itia. in=uene' amount o .oan and net interestmarin are studied! inrease in .oan is o..oed $/ .oer interest marinthen this is due to po.itia. .endin! ;therise' it is due to inrease indemands o .oans (Mio et a. ,005)! nrease in .endin ith derease ininterest marin has neative e6et on pro2ta$i.it/ and eien/ o $an1s!

4949



CHAPTER -

Anal,sis and Empirical &indings+n t(is c(apter! anal'sis o$ data gat(ered and empirical $indings are presented. s it is a

comparatie st"d' o$ t%o #aning sectors i.e. p"#lic and priate so one sector is #enc(mar $or

t(e ot(er sector. First empirical $indings o$ ratio anal'sis are presented along %it( t(e st"d' o$

e$$ect o$ elections on di$$erential per$ormance o$ p"#lic and priate #ans. +n t(e end! lending

#e(aio"r o$ #ot( p"#lic and priate #ans is st"died along %it( t(e st"d' o$ net interest margin

d"ring election 'ears. escription o$ $inancial statement items "sed in ratio anal'sis is presented

in ppendi *. atio anal'sis o$ indiid"al sample #ans is presented in t(e ppendi &.

-01 Pro4tabilit, Ratiosn this setion' ana./sis and empiria. 2ndins o those ratios are presentedthat provide inormation a$out pro2ta$i.it/ o $an1s! The ratios in.uded inthis setion are eturn on Assets (;A)' eturn on "3uit/ (;") and Kie.d on"arnin Assets (K;"A)!

-0101 Ret"rn on Assets 7ROA8

This ratio is measure o pro2ta$i.it/ o $an1s ater meetin a.. their e<pensesin omparison to tota. assets! >iher the ratio' more pro2ta$.e is the $an1!;A a.u.ated or pu$.i and private setor $an1s provides the $asis oromparison o pro2ta$i.it/ $eteen these to setors! ;A o pu$.i $an1sinreases rom ,005 to ,00I movin rom *!8I L to ,!,7L and then shosdereasin trend rom ,007 to ,008 movin rom ,!05L to -0!I9L! n ,009' itshos .itt.e reover/ and start inreasin aain and ain the va.ue 0!57L!Simi.ar is the situation or private $an1s e<ept that it does not shon an/sin o reover/ in the /ear ,009! t inreases rom *!*4L to *!+7L in /ear,005 to ,00I! rom the /ear ,007 it starts its dereasin trend and ends ith0!48L in ,007' -0!74L in ,008 and -,!8IL in ,009! rom the ta$.e 5!*' it is.ear that ;A o pu$.i $an1s is reater than private $an1s in ever/ ana./sis

/ear rom ,005 to ,009! ;vera..' the mean ;A o pu$.i $an1s i!e! *!,*L isreater than that o private $an1s i!e! -0!*,L hih shos that pu$.i $an1sare more pro2ta$.e than private $an1s in terms o ;A!

&oth $an1in setors sho deterioratin perormane durin and $eore thee.etion /ear i!e! ,007 N ,008! &oth setors are shoin donard trend ine.etion /ear a.thouh drop o ;A o pu$.i $an1s is more pronouned!Pu$.i $an1s have shon .itt.e reover/ in the /ear ,009 hi.e private setor$an1s are sti.. o$servin diu.ties! So .itt.e e6et o e.etion is ound onpu$.i $an1s as perormane o $oth setor is ver/ .ose on./ durin thee.etion /ear hi.e in a.. other /ears perormane o pu$.i $an1s is muh

$etter than private $an1s! Trends in perormane o ;A o $oth setors arevisi$.e rom the 2ure 5!*!

5050



iure-5!* eturn on Assets

Setor

,005 ,00I ,007 ,008 ,009 Mean

Pu$.i

*!8IL ,!,7L

,!05L

-0!I9L 0!57L

*!,*L

Private

*!*4L *!+7L

0!48L

-0!74L -,!8IL

-0!*,L

Ta#le-5.1 et"rn on ssets

-010$ Ret"rn on E>"it, 7ROE8 This ratio is a.so indiator o pro2ta$i.it/! t measures pro2ta$i.it/ o $an1s interms o their e3uit/! >iher the ratio' more pro2ta$.e is the $an1! ;" o pu$.i $an1s starts dereasin rom the /ear ,005 ith va.ue ,9!I+L in,005' ,8!9IL in ,00I' ,4!08L in ,007 and shos a$rupt a.. in ,008 (-5I!87L) and shos .itt.e reover/ in the /ear ,009 (5!8,L)! ;" o private$an1s inreases in the start rom ,005 to ,00I (*9!8,L to *9!98L) and thenshos dereasin trend rom ,007 ith va.ue *,!5,L' ,008 ith va.ue 5!I,Land -8!7,L in ,009! ;" o pu$.i $an1s is reater than private $an1s in a..the ana./sis /ear e<ept the /ear o ,008! ;vera..' mean ;" o pu$.i $an1s

i!e! I!+,L is .ess than that o private $an1s i!e! 9!84L hih shos thatpu$.i $an1s are .ess pro2ta$.e than private $an1s in terms o ;"!

5151



rom the ta$.e 5!,' it is .ear that perormane o pu$.i $an1s is $etter thanprivate $an1s in terms o ;" rom the /ear ,005 to ,007! &ut in the e.etion/ear i!e! ,008' it a..s a$rupt./ to -5I!87L and private setor $eomes morepro2ta$.e! Ater the e.etion /ear' aain the pu$.i setor perormane hasshon positive sin! ;n./ in the e.etion /ear pu$.i $an1s are .ess pro2ta$.e

than private $an1s! t shos that e.etion /ear has a6eted the perormaneo pu$.i $an1s! Trends in the perormane o ;" o $oth setors are visi$.erom the 2ure 5!,!

iure-5!, eturn on "3uit/

Setor

,005 ,00I ,007 ,008 ,009 Mean

Pu$.i

,9!I+L

,8!9IL

,4!08L

-5I!87L

5!8,L

I!+,L

Private

*9!8,L

*9!98L

*,!5,L

5!I,L -8!7,

L

9!84L

Ta$.e-5!, eturn on "3uit/

-010( @ield on Earning Assets 7@OEA8

This ratio is measure o pro2ta$i.it/ in terms o earnin assets! >iher theratio' more pro2ta$.e is the $an1! K;"A o pu$.i $an1s inreases rom ,005(4!+IL) to ,00I (4!90L) ith a s.iht a.. in the /ear ,007 (4!58L) and startsinreasin aain in ,008 (4!9+L) ti.. the /ear ,009 (5!,8L)! K;"A o private$an1s dereases rom ,005 to ,00I ith va.ue +!I*L to +!59L respetive./ti.. the /ear ,007 (+!07L) and then shos .itt.e reover/ in the /ear ,008

5252



(4!*9L) and ater that it aain shos dereasin trend ith va.ue +!I8L inthe /ear ,009! rom the ta$.e 5!+' it is .ear that K;"A o pu$.i $an1s isreater than private $an1s in ever/ ana./sis /ear! ;vera..' mean K;"A o pu$.i $an1s i!e! 4!8*L is reater than private $an1s i!e! +!I+L hih shosthat pu$.i $an1s are more pro2ta$.e than private $an1s in terms o K;"A!

There is .itt.e a.. in K;"A $eore the e.etion /ear in ,007 and K;"A o private $an1s a.so a.. in simi.ar ashion! urin e.etion /ear $oth setorshave inreased their K;"A! So there seems on spei2 e6et o e.etion /earon perormane o pu$.i $an1s is ound in terms o K;"A! Trends inperormane o K;"A o $oth setors are visi$.e rom the 2ure 5!+!

iure-5!+ Kie.d on "arnin Assets

Setor

,005 ,00I ,007 ,008 ,009 Mean

Pu$.i

4!+IL

4!90L 4!58L

4!9+L 5!,8L 4!8*L

Private

+!I*L

+!59L +!07L

4!*9L +!I8L +!I+L

5353



iure-5!4 ?ash to eposit atio

Setor

,005 ,00I ,007 ,008 ,009 Mean

Pu$.i

**!00L

*,!00L

**!+8L

**!08L

*,!04L

**!50L

Private

9!07L

9!*8L

*0!89L

8!9+L 8!I0L 9!++L

Ta#le-5.4 ?ash to eposit atio

-0$0$ )oan to 9eposit Ratio 7)9R8

This ratio is important indiator o .i3uidit/ o $an1s! Coer C means that$an1s have more deposits than .oans o6ered to ustomers and $an1s have

hiher a$i.it/ to meet their short term o$.iations! t redues ris1 o $an1 anda.so redues hanes o earnin rom deposits! C o pu$.i $an1s inreasesrom the /ear ,005 (5,!7+L) to ,00I (I0!*9L) and then shos a s.iht a.. in,007 (55!9+L)! n ,008' it inreases aain to I7!+4L and 2na../ is .oered inthe /ear ,009 ith va.ue 5*!40L! The trends in C o private $an1s aresame as that o pu$.i $an1s! t is .ear rom the ta$.e 5!5 that C o pu$.i$an1s is .ess than private $an1s in a.. the ana./sis /ears hih shos thatpu$.i $an1s are more .i3uid than private $an1s! ;vera..' the mean C o pu$.i $an1s i!e! 57!5, L is .ess than that o private $an1s i!e! 7*!84 L hih.eads to the on.usion that pu$.i $an1s are more .i3uid than private $an1sin terms o C!

The trends in di6erentia. perormane o C o pu$.i and private $an1s issame $eore and durin the e.etion /ear hih means that no spei2e.etion e6et is ound or pu$.i $an1s! Trends in perormane o C o $oth setors are visi$.e rom the 2ure 5!5!

5555



iure-5!5 Coan to eposit atio

Setor

,005 ,00I ,007 ,008 ,009 Mean

Pu$.i

5,!7+L

I0!*9L

55!9+L

I7!+4L 5*!40L

57!5,L

Private

I*!*,L

80!8*L

II!8+L

85!,4L I5!*9L

7*!84L

Ta$.e-5!5 Coan to eposit atio

-0$0( )oan to Asset Ratio 7)AR8

This ratio measures .i3uidit/ o $an1s in re.ation to .oan-tota. assetsomparison! >iher the ratio' .ess .i3uid is the $an1! t means that $an1s haveo6ered more .oans than their apait/ and ma/ ee. diu.t/ in meetin theirshort term o$.iations! CA o pu$.i $an1s inreases rom the /ear ,005(4,!40L) to the /ear ,00I (48!45L) and then dereases in the /ear ,007(45!,IL)! n the /ear ,008' it inreases aain to 55!5+L and 2na../ drops to.oest .eve. in the /ear ,009 to 4*!*,L! CA o private $an1s shos thesame pattern! t is .ear rom the ta$.e 5!I that CA o pu$.i $an1s is .essthan private $an1s in a.. the ana./sis /ears hih shos that pu$.i $an1s aremore .i3uid than private $an1s! ;vera..' the mean CA o pu$.i $an1s i!e!4I!55 L is .ess than that o private $an1s i!e! 5,!84 L! So it an $e on.udedthat pu$.i $an1s are more .i3uid than private $an1s in terms o CA!

The trends in CA o pu$.i and private $an1s are same $eore and durin thee.etion /ear hih means that no spei2 e.etion e6et is ound or pu$.i$an1s! Trends in perormane o CA o $oth setors are visi$.e rom the2ure 5!I!

5656



iure-5!I Coan to Asset atio

Seto

r

,005 ,00I ,007 ,008 ,009 Mean

Pu$.i 4,!40L

48!45L

45!,IL

55!5+L

4*!*,L 4I!55L

Private

4+!7IL

55!7IL

49!5*L

I,!7+L

5,!45L 5,!84L

Ta#le-5.6 ;oan to sset atio

T(e res"lts o$ all ratios o$ li<"idit' s(o% t(at p"#lic #ans are more li<"id t(an priate #ans i.e.

p"#lic #ans (ae greater a#ilit' to meet t(eir s(ort term o#ligations and lo%er ris t(an priate #ans. )o speci$ic political e$$ect is $o"nd $or p"#lic #ans. =o no eidence is $o"nd $or t(eor' o$

propert' rig(ts and p"#lic c(oice t(eor' in case o$ li<"idit' o$ #ans.

-0( 3ol%enc, and Risk Ratios

n this setion' ana./sis and empiria. 2ndins o those ratios arepresented that measure a$i.it/ o $an1s in meetin .on termo$.iations! The ratios in.uded in this setion are e$t-"3uit/ atio

(")' e$t to Tota. Assets atio (TA) and "3uit/ Mu.tip.ier ("M)!

-0(01 9ebt#E>"it, Ratio 79ER8

This ratio measures the e<tent to hih a $an1 depends on de$t 2naninthan e3uit/ 2nanin! >iher the ratio' more ris1/ are the $an1 operationsand hiher i.. $e the hanes that $an1 i.. deau.t on its de$ts! So this ratiomeasures a$i.it/ o $an1s to a$sor$ 2nania. sho1s! The " o pu$.i $an1sdereases rom the /ear ,005 ith va.ue 0!8* to the /ear ,007 ith va.ue0!45! n ,008' it rises to the va.ue o 0!98 and then a.. in the /ear ,009 to

0!,I! The trends in " o private $an1s are same e<ept that it oes onrisin even in the /ear ,009! t is .ear rom the ta$.e 5!7 that " o pu$.i

5757



$an1s is .ess than private $an1s in a.. the ana./sis /ears hih means thatpu$.i $an1s are more so.vent and .ess ris1/ than private $an1s! ;vera..' themean " o pu$.i $an1s i!e! 0!I+ is .ess than that o private $an1s i!e! *!,4hih .eads to the on.usion that pu$.i $an1s are more so.vent and .essris1/ than private $an1s in terms o "!

The trends in " o pu$.i and private $an1s are same $eore and durin thee.etion /ear! A.thouh' pu$.i $an1s have hiher so.ven/ (.oer ") thanprivate $an1s $ut their perormane omes ver/ .ose to private $an1s durine.etion /ear hih means that e.etion /ear has a6eted perormane o pu$.i $an1s! Trends in perormane o " o $oth setors are visi$.e romthe 2ure 5!7!

iure-5!7 e$t-"3uit/ atio

Setor

,005

,00I ,007 ,008 ,009 Mean

Pu$.i

0!8* 0!I5 0!45 0!98 0!,I 0!I+

Private

*!II *!+7 0!84 *!07 *!,I *!,4

Ta#le-5.7 e#t-E<"it' atio

5858



Ta$.e-5!8 e$t to Tota. Asset atio

-0(0( E>"it, +"ltiplier 7E+8

This ratio is another important indiator o so.ven/ o $an1s! t measuresho muh the $an1s have onverted their de$ts to assets in omparison totheir e3uit/! >iher va.ue o this ratio .eads to ris1/ situations! The "M o pu$.i $an1s dereases rom the /ear ,005 (*5!78) to the /ear ,007 (**!7I)!"M inreases in the /ear ,008 to *7!75 and 2na../ drop to 9!8, in the /ear,009! The "M o private $an1s shos the same pattern e<ept that it doesnot sho dona.. in the /ear ,009! t is .ear rom the ta$.e 5!9 that the "Mo pu$.i $an1s is hiher than private $an1s in a.. the ana./sis /ear e<ept the/ear o ,009! ;vera..' mean "M o pu$.i $an1s i!e *+!54 is reater than thato private $an1s i!e *,!8* hih .eads to the on.usion that pu$.i $an1s aremore dependant on de$t 2nanin than private $an1s and depit ris1/

situations!

As "M o $oth pu$.i and private $an1s inreases durin the e.etion /earthan previous /ear $ut inrease in "M o pu$.i $an1s is a$rupt hih an $edue to e.etion e6et! Trends in perormane o "M o $oth setors are visi$.erom the 2ure 5!9!

iure-5!9 "3uit/ Mu.tip.ier

Seto

r

,005 ,00I ,007 ,008 ,009 Mean

6060



Pu$.i

*5!78

*,!I0 **!7I

*7!75 9!8, *+!54

Priva

te

*+!5

4

*,!*, **!I

4

*,!*0 *4!I5 *,!8*

Ta#le-5.9 E<"it' >"ltiplier

To ratios o so.ven/ i!e! " and TA on.uded that pu$.i $an1s aremore so.vent than private $an1s hi.e third ratio "M on.uded thatpu$.i $an1s are .ess so.vent than private $an1s! ;vera..' rom theresu.ts it an $e on.uded that pu$.i $an1s are more so.vent thanprivate $an1s! >ere in ase o so.ven/' .itt.e evidene is ound ortheor/ o propert/ rihts! To ratios " and "M have provided e6eto e.etion on di6erentia. perormane o pu$.i and private $an1shih provide support or pu$.i hoie .iterature!

-0* E;cienc, or Acti%it, Ratios

n this setion' ana./sis and empiria. 2ndins o those ratios arepresented that provide inormation a$out eien/ o $an1s! Theratios in.uded in this setion are Asset Uti.iation (AU)' nome"<pense atio (") and ;peratin "ien/ (;")!

-0*01 Asset tilization 7A8

This ratio determines that ho eient./ the $an1 is uti.iin its assets ineneratin revenues! >iher va.ue o it revea.s that $an1 is eient inuti.iin its resoures! The AU o pu$.i $an1s inreases rom the /ear ,005 to,008 ranin rom I!97L to *0!8IL! n ,009' it s.iht./ drops to 9!8+L! TheAU o private $an1s shos an inreasin trend rom the /ear ,005 to ,009ontinuous./ ranin in va.ues rom I!++L to *0!+5L! t is .ear rom theta$.e 5!*0 that the AU o pu$.i $an1s is reater than private $an1s in a.. theana./sis /ears e<ept the /ear o ,009! ;vera..' the mean AU o pu$.i $an1s

i!e! 9!07L is reater than that o private $an1s i!e! 8!5IL hih .eads to theon.usion that pu$.i $an1s are more eient than private $an1s in terms o AU!

The AU o $oth setors shos an inreasin trends durin the e.etion /earand di6erentia. perormane is a.so una6eted' so no spei2 po.itia. e6etis ound or pu$.i $an1s! Trends in perormane o AU o $oth setors arevisi$.e rom the 2ure 5!*0!

6161



iure-5!*0 Asset Uti.iation

Setor

,005 ,00I ,007 ,008 ,009 Mean

Pu$.i

I!97L

8!78L 8!9*L

*0!8IL

9!8+L 9!07L

Private

I!++L

7!7*L 8!*IL

*0!,+L

*0!+5L 8!5IL

Ta#le-5.10 sset tiliation

-0*0$ !ncome E:pense Ratio 7!ER8

This ratio determines eien/ o $an1s in eneratin pro2t hi.e ontro..intheir e<penses! >iher the ratio' hiher is the eien/ o $an1s ineneratin inome and in ontro..in e<penses! The " o pu$.i $an1sinreases rom *!,7 to *!5+ in /ear ,005 to ,00I respetive./! t then drops inthe ne<t to suessive /ears to 0!*5 in ,008! n ,009' it shos .itt.ereover/ and ains the va.ue o 0!,4! The " o private $an1s shos adereasin trend rom the /ear ,005 to ,009 ith va.ues ranin rom 0!IIto 0!**! The " o pu$.i $an1s is reater than private $an1s in a.. theana./sis /ears e<ept the /ear o ,008! ;vera..' the mean " o pu$.i $an1si!e! 0!8I is reater than that o private $an1s i!e! 0!+8 hih on.udes that

pu$.i $an1s are more eient in eneratin inome and in ontro..ine<penses than private $an1s!

6262



The " o $oth setors drops durin the e.etion /ear $ut the drop o " orpu$.i $an1s is hih./ sini2ant hih ma1es their perormane .ose toprivate $an1s! So e.etion /ear has a6eted perormane o pu$.i $an1s! Trends in perormane o " o $oth setors are visi$.e rom the 2ure 5!**!

iure-5!** nome "<pense atio

Setor

,005 ,00I ,007 ,008 ,009 Mean

Pu$.i

*!,7 *!5+ *!*0 0!*5 0!,4 0!8I

Private

0!II 0!I, 0!,9 0!,+ 0!** 0!+8

Ta#le-5.11 nome "<pense atio

-0*0( Operating E;cienc, 7OE8

This ratio measures eien/ o $an1s in eneratin operatin revenues andin ontro..in operatin e<penses! >iher the ratio' more eient is the$an1s! The ;" o pu$.i $an1s inreases rom ,005 to ,00I ith va.ue ,!87 to+!45 respetive./! n ,007' it drops to ,!*+ and in ,008' it urther drops to*!54! n ,009' it shos .itt.e reover/ and ains the va.ue o *!9,! The ;" o

private $an1s inreases rom ,005 to ,00I havin va.ues ,!44 and ,!I8! n,007' it drops to ,!*+! n ,008' it shos .itt.e reover/ to ,!,* and maintain

6363



inreasin trend in the /ear ,009 ith va.ue ,!49! The ;" o pu$.i $an1s israeter than private $an1s rom ,005 to ,007! #hi.e ;" o private $an1s isreater than pu$.i $an1s in the /ears o ,008 and ,009! ;vera..' the mean;" o pu$.i $an1s i!e! ,!54 is reater than that o private $an1s i!e! ,!+9hih .eads to the on.usion that pu$.i $an1s are more eient in

eneratin operatin revenues and ontro..in their operatin e<penses thanprivate $an1s!

As it is o$served rom the ta$.e 5!*, that ;" o pu$.i $an1s drops durin thee.etion /ear hi.e that o private $an1s improves durin the e.etion /earresu.tin into $etter perormane o private $an1s durin e.etion /ear' sopo.itia. e6et an $e o$served in perormane o pu$.i $an1s! Trends inperormane o ;" o $oth setors are visi$.e rom the 2ure 5!*,!

iure-5!*, ;peratin "ien/

Seto

r

,005 ,00I ,007 ,008 ,009 Mean

Pu$.i

,!87 +!45 ,!9+ *!54 *!9, ,!54

Private

,!44 ,!I8 ,!*+ ,!,* ,!49 ,!+9

Ta#le-5.12 ;peratin "ien/

rom the resu.ts o a.. eien/ ratios' it an $e on.uded that pu$.i $an1s

in Pa1istan are more eient than private $an1s! Sti.. in ase o eien/' noempiria. evidenes are ound or the theor/ o propert/ rihts $ut evidene

6464



is ound or the pu$.i hoie theor/ as in ase o " and ;"' the e.etionshave a6eted perormane o pu$.i $an1s more than private $an1s! Soevidenes are ound or pu$.i hoie .iterature in ase o eien/!

-0- )ending eha%io"r o anksn this setion' .endin $ehaviour o $oth pu$.i and private setor $an1s isana./ed to determine po.itia. e6et on their perormane! Amount o .endin and perent inrease or perent derease in .endin o individua.$an1s rom previous /ear or the /ear ,005 to ,009 is presented in theAppendi< ! ndividua. perent inrease or perent derease o a.. the samp.e$an1s in eah setor is added and averae is ta1en and resu.ts are presentedhere in Ta$.e 5!*+!

t is .ear rom the ta$.e 5!*+ that $oth setor $an1s have redued their.endin $eore the e.etion /ear i!e! ,007 a.thouh it is more pronouned inase o private $an1s! n the /ear ,008' pu$.i $an1s have urther reduedtheir .endin $ut .endin o private $an1s is .itt.e inreased! So no po.itia.e6et is visi$.e here or pu$.i $an1s in Pa1istan in terms o .endin! Anotherinterestin at hih is depited here $/ the ta$.e 5!+ is that $oth setor$an1s are harin hiher K;"A (pro</ here or net interest marin) durinthe e.etion /ear than the previous /ears! >iher K;"A means that $an1s aredisourain .oans to their ustomers and enDo/in hiher pro2t! t is a.sovisi$.e rom the 2 5!+ that pu$.i setor $an1s are harin hiher netinterest marin than private setor $an1s $eore and durin the e.etion /ear!

This at tota../ ru.es out the po.itia. e6et on pu$.i $an1s in Pa1istan!

iure-5!*+ L inrease or derease in .endin

Seto ,005 ,00I ,007 ,008 ,009

6565



r

Pu$.i

44!*+L

++!79L

*+!,8L

9!*5L

7!08L

Private

44,!,9L

+05!7+L

*,!57L

5I!+IL

-0!49L

Ta$.e-5!*+ L inrease or derease in .endin

-0. Empirical &indingst is .ear rom the resu.ts o a.. the our perormane measures that pu$.i

$an1s are superior in perormane than private $an1s in rep./ to 2rstresearh 3uestion! ;ut o te.ve ratios' on./ to ratios (;" N "M) provedthat private onership is superior! So a ver/ ea1 support is ound orpropert/ rihts theor/ and pu$.i hoie theor/! Simi.ar./' out o te.ve ratios'on./ si< ratios provided an/ evidene o e6et o e.etions on di6erentia.perormane o pu$.i and private $an1s in response to seond researh3uestion! So pu$.i hoie theor/ spei2a../ a.so ot a ea1 support!Moreover' .endin $ehavior o pu$.i and private $an1s a.on ith the stud/o net interest marin has tota../ ru.ed out the presene o po.itia. e6et onpu$.i $an1s in response to third researh 3uestion! As $an1in setor o Pa1istan is hih./ ompetitive no due to introdution o 2nania. reorms' itan $e said that theor/ o propert/ rihts and pu$.i hoie theor/ do notor1 e.. in ompetitive mar1ets! n ompetitive mar1ets' pu$.i $an1s a.soadopt ompetin strateies ith their private ounterparts and an $e moreeient and pro2ta$.e than private $an1s! This on.usion is onsistent iththat o Spann (*977)!

The omp.ete omparison or pu$.i and private setor $an1s or a.. the *,ratios is presented in ta$.e 5!*4! Moreover' evidenes or propert/ rihtstheor/ and pu$.i hoie theor/ an a.so $e o$served rom ta$.e 5!*4!

Perormanemeasure

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Private&an1s

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Pro4tabilit,

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Ta$.e-5!*4 ;vera.. omparison o pu$.i and private $an1s

CHAPTER .

Concl"sions andRecommendations

.01 Concl"sions The theor/ o propert/ rihts and pu$.i hoie .iterature 3uote or superiorperormane o private onership as ompared to pu$.i onership! The maino$Detives o this researh are to test the h/pothesis presented $/ these

theories in a ne environment i!e! $an1in setor o Pa1istan! This is main./ a3uantitative stud/ usin ratio ana./sis a.on ith 3ua.itative ana./sis o

6767



empiria. 2ndins o ratio ana./sis! rom the empiria. 2ndins' a ver/ ea1support is ound or $oth theories!

;ut o te.ve ratios used in ratio ana./sis' ten ratios support pu$.i onershipor superior perormane as ompared to private onership and on./ to

ratios 3uote that private onership is superior in perormane than pu$.ionership! So rom empiria. 2ndins it an $e on.uded that perormaneo pu$.i $an1s is superior to private $an1s in Pa1istan in terms o pro2ta$i.it/' .i3uidit/' so.ven/ and eien/!

Simi.ar./' out o te.ve ratios' on./ si< ratios provided evidene o e6et o e.etions on perormane o pu$.i onership hih is a ea1 support orpu$.i hoie theor/! Moreover' .endin $ehavior o pu$.i and private $an1sa.on ith the stud/ o net interest marin has tota../ ru.ed out the preseneo po.itia. e6et on pu$.i $an1s! t an $e on.uded rom these empiria.2ndins that either po.itia. in=uene on pu$.i $an1s is minimied or po.itia.

in=uene is a6etin $oth setor o $an1s!

As $an1in setor in Pa1istan is hih./ ompetitive no due to introdution o 2nania. reorms in Pa1istan' it an $e on.uded that the theor/ o propert/rihts and pu$.i hoie theor/ do not or1 e.. in ompetitive mar1ets! Thison.usion is ontrast to that provided $/ &oardman N Finin (*989)!

+t can also #e concl"ded $rom t(e empirical $indings t(at priatiation is not t(e onl' sol"tion to

poor per$ormance o$ p"#lic o%ners(ip. T(e introd"ction o$ competition can s"#stantiall' improe

t(e per$ormance o$ p"#lic o%ners(ip. T(is concl"sion is consistent %it( t(at o$ Spann (*977)!

.0$ Recommendations?urrent researh on./ ompares the perormane o mathed and near./mathed pairs o pu$.i and private $an1s in Pa1istan in terms o pro2ta$i.it/'.i3uidit/' so.ven/ and eien/! urther researh an $e arried outin.udin a.. the pu$.i and private $an1s in Pa1istan! As resu.ts o$tained areopposite to the theor/ o propert/ rihts and pu$.i hoie theor/' a3ua.itative researh an $e arried out to 2nd the reasons o these 2ndins!

ReerencesAharoni' K *98I' The Evolution and Management of State OwnedEnterprises' &a..iner Pu$.ishin' ?am$ride' MA!

A.hian' AA *987' QPropert/ ihts%' in E! "ate..' M! Mi.ate and P! Jeman(eds!)' The ew Palgrave! A "ictionary of Economics# Fo.! +' Pa.raveMami..an' Je Kor1' pp! *0+*-*0+4!

A.hian' AA N emset' > *97,' QProdution' normation ost and

"onomi ;raniation%' American Economic $eview# Fo.! I,' pp! 777-795!

6868



A.hian' AA N emset' > *97+' QThe Propert/ iht Paradim%' The %ournal of Economic &istory# Fo.! ++' ssue *' pp! *I-,7!

A.tun$as' K' "vans' C N Mo./neu<' P ,00*' Q&an1 ;nership and"ien/%' %ournal of Money# Credit and Banking' Fo.!++' ssue 4' pp! 9,I-

954!

Atri..' P N MCane/' " ,00I' Accounting and 'inance! for on(specialist#Pearson "duation Cimited' "n.and!

&a1<' M' ?arne/' M N BedaD.ovi' " ,00,' QPu$.i' Private and Mi<ed;nership and the Perormane o nternationa. Air.ines%' %ournal of Air Transport Management# ssue 8' pp! ,*+-,,0!

&ardhan' P@ *984' The Political Economy of "evelopment in )ndia# &asi.&.a1 #e..' ;<ord!

&en-Jer' A' Montias' EM N Jeu$erer' A *99+' Q&asi ssues in;raniations: A ?omparative Perspetive%' %ournal of ComparativeEconomics# ssue *7' pp! ,07-,4,!

&ha/a' > *990' QManaement "ien/ in the Private and Pu$.i Setorsin ndia%' in E >eath (eds!)' Pu*lic Enterprise at the Crossroads# out.ede'Condon' pp! ,,8-,40!

&orherdin' T"' Pommerehne' ## N Shneider' *98,' Q?omparin the"ien/ o Private and Pu$.i Prodution: A Surve/ o the "videne rom

2ve edera. States%' +eitschrift 'ur ationallokonomie# ssue ,' pp! *,7-*5I!

&o/1o' M' Sh.eier' A N Fishn/' # *99I' QA theor/ o Privatiation%' TheEconomic %ournal# Fo.! *0I' ssue 4+5' Marh' pp! +09-+*9!

&oardman' A" N Finin' A *989' Q;nership and Perormane inompetitive environments: A ?omparison o the Perormane o Private'Mi<ed' and State-;ned "nterprises%' %ournal of ,aw and Economics# ssue+,' pp! *-++!

&oardman' A" N Finin' A *99,' Q;nership Fersus ?ompetition:"ien/ in Pu$.i "nterprise%' Pu*lic Choice# ssue 7+' pp! ,05-,+9!

?arro..' @A *990' Q&ureau ?ompetition and neien/: A eeva.uation o Theor/ and "videne%' %ournal of Economic Behavior and Organi-ation# Fo.!*+' Eanuar/' pp! ,*-40!

?arro..' @A ,004' Property $ights and Managerial "ecisions in 'or(pro.t#nonpro.t# and Pu*lic Organi-ations# Pa.rave Mami..an' Je Kor1!

?aves' # N ?hristiansen' C *980' QThe e.ative "ien/ o Pu$.i and

Private irms in a ?ompetitive "nvironment: The ?ase o ?anadianai.roads%' %ournal of Political Economy# ssue 88' pp! 958-97I!

6969



uru$otn' "B N PeDovih' S *974' %ntrodution: the Je Propert/ ihtsCiterature%' in "B uru$otn and S PeDovi (eds!)' The Economics of Property $ights# &a..iner Pu$.ishin ?ompan/' ?am$ride' pp! *-9!

B.aeser' " N Sh.eier' A *998' QJot-or pro2t "nterpreneurs%' Mimeo!

Brosse' N Kanes' E *998' Q?arr/in out a Suessu. Privatiation: The KP?ase%' Academy of Management E6ecutives# ssue *,' pp! I7-7+!

Brossman' S N >art' ; *98I' QThe ?osts and &ene2ts o ;nership: A Theor/ o Fertia. and Catera. nteration%' %ournal of Political Economy#Fo.! 94' pp! I9*-7*9!

>ani' MJ ,00+' Qestruturin o inania. Setor in Pa1istan%' The %ournalof the )nstitute of Bankers in Pakistan5

>ansmann' > ,000' The Ownership of Enterprise# >arvard Universit/ Press'Condon!

>art' ; *995' 'irms# Contacts# and 'inancial Structure' ;<ord Universit/Press' ;<ord!

>art' ; N Moore' E *990' QPropert/ ihts and the Jature o the irm%' %ournal of Political Economy# Fo.! 98' ssue I' pp! ***9-**58!

>e' ,00,' Q?hina State-oned "nterprise eorm: Past' Present anduture%' unpu$.ished manusript!

>orne' EF N #ahoi' E ,005' 'undamentals of 'inancial Management#Pearson "duation' *,th "dition' Je e.hi!

Ee6erson' B> N as1i' TB *994' Q"nterprise eorm in ?hinese ndustr/%' %ournal of Economic Perspective# ssue 8' pp! 47-70!

Eha' N Sahni' &S *99,' QMeasures o "ien/ in Private and Pu$.iSetor ndustries: The ase o ndia%' Annals of Pu*lic and CooperativeEconomics# Fo.! I+' pp! 489-495!

@a/' EA N Thompson' E *98I' QPrivatiation: A Po.i/ in searh o aationa.e%' Economic %ournal# ssue 9I' pp! *8-+,!

@han' A> *995' QJeed and Sope or urther eorms in the inania.Setor in Pa1istan%' The %ournal of the )nstitute of Bankers in Pakistan5

@haDa' A' N Mian' A ,005' Qo Cenders avor Po.itia../ ?onneted irmseent Provision in an "merin inania. Mar1et%' 7uarterly %ournal of Economics5

@rueer' A; *990' QBovernment ai.ures in eve.opment%' %ournal of Economic Perspective# Fo.! 4' ssue +' pp! 9-,+!

7171



@um$ha1ar' S? N >Da.marsson' C *998' Qe.ative Perormane o Pu$.i andPrivate ;nership under Kardsti1 ?ompetition: ".etriit/ etai.istri$ution%' European Economic $eview# ssue 4,' pp! 97-*,,!

Ca Porta' ' Cope-de-si.anes' N Sh.eier' A ,00,' QBovernment

;nership o &an1s%' %ournal of 'inance# Fo.! 57' ssue ,' pp! ,I5-+0*!

Candes' #M N Posner' A *975' QThe ndependent Eudiiar/ in an nterestBroup Perspetive%' %ournal of ,aw and Economics# Fo.! *8' pp! 875-90*!

Cind$.om' ?" *977' QPo.itis and Mar1ets%' Basic Books# Je Kor1!

Ciu' *995' QThe ?omparative Perormane o Pu$.i and Private"nterprises' The ?ase o &ritish Ports%' %ournal of Transport Economics andPolicy# Septem$er!

MaDumdar' S@ *998' QAssessin ?omparative "ien/ o the State-oned'Mi<ed and Private setors in ndian industr/%O Pu*lic Choice' Fo.!9I' pp! *-,4!

Marathe' SS *989' $egulation and "evelopment# Sae' Je e.hi!

Meinson' #C' Jash' ? N van anden$orh' M *994' QThe inania. and;peratin Perormane o Je./ Privatied 2rms: An nternationa."mpiria. Ana./sis%' %ournal of 'inance# vo.! I9' pp! 40+-45,!

Mio' A' Pania' U N Kane' M ,005' Q&an1 ;nership and Perormane:

oes Po.itis Matter%' /orking Paper 389# ?entra. &an1 o ?hi.e!Mi.rom' P N o$erts' E *99,' Economics# Organi-ation and Management 'Prentie >a..' J!E!

Mirr.ess' EA *97I' QThe ;ptima. Struture o nentives and Authorit/ ithinan ;raniation%' Bell %ournal of Economics# ssue 7' pp! *05-*+*!

Mue..er' ? *97I' QPu$.i ?hoie: A Surve/%' %ournal of Economic,iterature# Fo.! *4' ssue ,' pp! +95-4++!

Mue..er' ? *989' Pu*lic Choice# ?am$ride Universit/ Press' ?am$ride!

a//um' A N Ahmed' M ,00I' Q"ien/ and Sustaina$i.it/ o Miroinane nstitutions in South Asia%' South Asian etwork of Economic$esearch )nstitute5

aine/' >' &a1o6' # N Cevine' ?> *978' Q?omparin Pu$.i and Private;raniations' Pu*lic Administration $eview# ssue +I' pp! ,,+-,44!

amasam/' @ ,00*' Q;raniationa. ;nership' ?ompetitive ntensit/'and irm Perormane: An "mpiria. Stud/ o ndian Manuaturin Setor%'Strategic Management %ournal# ssue ,,' pp! 989-998!

o$son' ? ,00,' $eal /orld $esearch# Seond "dition' &.a1e..' ;<ord!

7272



oss' SA' #ester2e.d' # N Ea6e' E ,005' Corporate 'inance# 7th "dition'MBra->i.. n!

Sa$i' M *99I' Q?omparative Ana./sis o orein and omesti &an1;perations in >unar/%' %ournal of Comparative Economics# Fo.! ,,' pp!

*79-*88!

Samad' A *999' Q?omparative "ien/ o the s.ami &an1 Ma.a/sia vis--vis ?onventiona. &an1s%' )):M %ournal of Economics and Management# Fo.!7' ssue *' pp! *-,5!

Samad' A N >assan' @ ,000' QThe Perormane o Ma.a/sian s.ami&an1in durin *984-*997: An "<p.orator/ Stud/%' Thoughts onEconomics# Fo.! *0' ssue * N ,' pp! 7-,I!

Sapiana' P ,004' QThe "6ets o Bovernment ;nership on &an1

Cendin%' %ournal of 'inancial Economics# Fo.! 7,' ssue ,' pp! +57-+84!

Saunders' M' Ceis' P N Thornhi..' A ,00+' $esearch Methods for BusinessStudents# Pearson "duation' Je e.hi!

Sh.eier' A N Fishn/' # *994' QPo.itiians and irms%' The 7uarterly %ournal of Economics# ssue *0I' pp! 995-*0,5!

Sh.eier' A *998' QState versus Private ;nership%' The %ournal of Economic Perspectives# Fo.! *,' ssue 4' Autumn' pp! *++-*50!

So.omon' "" *98I' QPrivate and Pu$.i Setor Manaers: An "mpiria.nvestiation o Eo$ ?harateristis and ;raniationa. .imate%' %ournal of Applied Psychology# Fo.! 7*' ssue ,' pp! ,47-,59!

Spann' M *977' QPu$.i vs! Private Provision o Bovernment Servies%' in Thomas "! &orherdin (eds!)! Budgets and Bureaucrats! The Sources of ;overnment ;rowth# u1e Univ! Press' urham' J!?!

Spind.er' A *99*' QThe Perormane o nternationa../ Ative &an1s andSeurities irms%' 'ederal $eserve Bank of ew <ork =Sta> Study?# Ma/!

Stainer' C ,00I' QPerormane Manaement and ?orporate Soia.esponsi$i.it/: The Stratei ?onnetion%' %ournal of Strategic Change# Fo.!*5' pp! ,5+-,I4!

State &an1 o Pa1istan ,0*0' QAddresses o &an1sGeve.opment inanenstitutions &ein eu.ated $/ State &an1 o Pa1istan%' in State Bank of Pakistan(The Central Bank# aessed ,9 Ma/ ,0*0' romhttp:GG!s$p!or!p1GV.in1sGinde<!asp

Sti.it' E *994' QThe o.e o the State in inania. Mar1ets%' Proceedings of the /orld Bank Annual Conference on Economic "evelopment 2@@3#

#ashinton !?! Tierne/' E *998' The :5S5 Postal Service# Au$urn >ouse' Je Kor1!

7373



Thompson' E *9I,' Q?ommon and Unommon ".ements inAdministration%' Social /elfare $eform# pp! *8*-,0*!

U.->a3ue' J *997' Qinania. Mar1et eorm in Pa1istan%' The Pakistan"evelopment $eview Part())# Fo.! +I' ssue 4' pp! 8+9-854!

Fi1ers' E' Karro' B *988' Privati-ation! An Economic Analysis' MT Press'?am$ride' MA!

#ams.e/' BC N a.d' MJ *97+' QThe Po.itia. "onom/ o ;raniations%',e6ington# MA' !?! >eath!

#eis$rod' & *988' on Pro.t Economy ' >arvard Universit/ Press'?am$ride' M!A!

#hitehead' ? *988' Qntrodution' Theor/ and Pratie%' n ?! #hitehead

(eds!)' $eshaping the ationali-ed )ndustries# Transation &oo1s' Je&runsi1' Je Eers/' pp! *-,*!

#i..iamson' ;" ,00,' QThe theor/ o the irm as Bovernane Struture:rom ?hoie to ?ontrat%' %ournal of economic perspectives# Fo.! *I' ssue+' Summer' pp! *7*-*95!

#intro$e' *987' QThe Mar1et or ?orporate ?ontro. and the Mar1et orPo.itia. ?ontro.%' %ournal of ,aw# Economics and Organi-ation# Fo.! +' a..'pp! 4+5-448!

eitun' N Tian' BB ,007' Qoes onership a6et a 2rm%s Perormaneand deau.t ris1 in Eordan%' Corporate ;overnance# Fo.! 7' ssue *' pp! II-8,!

7474



APPE69!B A

ebsites o anks "nder st"d,

Public Sector Banks Private Sector Banks

National Bank of Pakistan

>ead ;e' !! ?hundriar oad' @arahi

Te.ephone ;e: 0,*-99,*,,00 N99,*,,08

a< Jum$er: 0,*-99,*,774

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,,->a$i$ &an1 P.aa

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r! S/edna Tahir Saiuddin Memoria.oundation

&eaumont oad' ?ivi. Cines' @arahi

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http:GG!$an1a.ha$i$!om

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>ead ;e' &;P T;#"' *0-&' &.o1 "-**'

Main &ou.evard Bu.$er-' Cahore

Te.ephone ;e:04,-+578+7** N+578+7*,

a< Jum$er:04,-+578+7*+

Atlas Bank Limited

+rd .oor' ederation >ouse

A$du..ah Shah Bhai oad' ?.iton'@arahi

Te.ephone ;e: 0,*-+,4I+570

a< Jum$er: 0,*-+,4I+57*

!at.as$an1!om!p1

7575



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Y ata Jot Avai.a$.e

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Ta$.e-,! Perent inrease or derease in .oans rom previous /ear $/individua. $an1s

final thesis muhammad usman (1)

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