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Business Review

Article Title

Diversification in banking sector with special reference to finance

Abstract

Diversification in Banking Sector is relatively a new phenomenon. The aim of this article was to analyze the boom in banking sector with special reference to CONSUMER FINANCING. For this purpose, financial products - Credit cards, Home financing and Car financing - of different banks were selected and their policies were analyzed. My goal was to find the reasons behind the diversification in Banking Sector particularly in Consumer financing over the last 10 years. For this, I collect the data from different banks to analyze the factors involving in it. After analyzing the various aspects of financing strategy in banks, I concluded that the major reason behind the boom in consumer financing is INFLATION. Purchasing power of the people has greatly reduced for the past ten years. Due to this reason people were attracted towards the policies, which different banks are offering in different products like home, cars and home appliances, with minimum down payment and minimum markup. Another reason behind the boom is 9/11 incident. After the incident the liquidity form of money in Pakistan was raised with a great extent, because Pakistanis living in European countries and America projected their future in danger. So they transfer their earnings to their homeland. This is the reason, which raised the liquidation of money in the economy. In order to overcome this problem, State Bank ordered the commercial banks too lower their interest rates so that people will invest their earnings in Banks.

Keywords

Finance, inflation, liquidity

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Published Online

February 22, 2021

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