X-efficiency, scale economies, technological progress, and competition: The banking sector in Pakistan

Abstract

Monopolistic power on these banks. This will also help in bringing stability to the financial sector, which is an important concern of the State Bank of Pakistan (SBP). So the best policy option for SBP is to encourage mergers, while keeping a check on interest spread, so that the benefits from the reduction in cost due to mergers are passed on to depositors and borrowers.