Client Name

JS Bank Limited

Faculty Advisor

Ms. Muniba Abdullah

SBS Thought Leadership Areas

Behavioural Studies

SBS Thought Leadership Area Justification

The project studies how households and small businesses changed their financial behavior under economic stress, for example, shifting from formal to informal borrowing (only 7% used banks while 39% borrowed from family/friends), cutting or stopping savings (72% affected), and changing spending priorities in response to IMF-driven inflation and subsidy cuts.

Aligned SDGs

GOAL 1: No Poverty

Aligned SDGs Justification

The study measured how the removal of energy subsidies and rising prices pushed households toward hardship. National poverty rose from 21.9% to roughly 28.9% over the program period, and our survey found 58% of households reported a worsened financial situation, with 84% feeling food-cost pressure. The project's recommendations, such as emergency lending and fee-free accounts, aim to protect those most at risk of falling into poverty.

NDA

No

Abstract

Pakistan has been subject to IMF program more than any other country in the world, and the latest round of programs involved three consecutive programs from 2019–24. This is an Experiential Learning Project in partnership with JS Bank Ltd, which will allow the assessment of the socioeconomic implications of the conditionality imposed on these programs and the implications for a commercial bank. The project had three aims – to understand the impact of fiscal adjustment on inflation, poverty and income inequality; to understand how fiscal adjustment affected household and small business spending, saving and borrowing behaviour; and to recommend social and financial inclusion policy options for the banking sector. An explanatory sequential mixed methods design was used. During three program windows, the secondary data analysis was carried out from national sources like the International Monetary Fund, State Bank of Pakistan, Pakistan Bureau of Statistics, and World Bank, and a primary survey of fifty-seven respondents who were both households and small business owners in Karachi was performed, complemented by qualitative responses. Its results indicate that while stabilization was effective in achieving its headline objectives, the price of adjustment was disproportionately borne by the vulnerable with inflation dropping from its historic high of close to thirty-eight percent in 2023 to its nine-year low in 2025. National poverty increased by about seven percentage points, income inequality increased, and low-income families were 2.4 times more likely than high-income families to say their finances were worse. The financial system failed to absorb the impact: Only seven percent of borrowers had a bank, and none of those who did have a bank accessed commercial bank financing – most resorted to informal lenders. The findings indicate that stabilization and inclusion do not conflict and highlight a set of product-level steps that can be taken by JS Bank to serve underserved small businesses and households and develop a viable market segment.

Document Type

Restricted Access

Document Name for Citation

Experiential Learning Project

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