Financial citizenship and shadow banking in Pakistan: a study of two deposit-taking microfinance banks

Jafri, Juvaria ORCID: (2021) Financial citizenship and shadow banking in Pakistan: a study of two deposit-taking microfinance banks. Eurasian Geography and Economics. ISSN 1538-7216

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I apply a financial citizenship lens to the Pakistani banking sector to consider how inclusive finance resolves the issue of uneven financial access. For this, I draw attention to how inclusive finance is a form of shadow banking. The case of Pakistan shows that policies of inclusive finance create a heterogeneous formal financial space. Institutionalized forms of inclusive finance result in a banking system that offers uneven access to finance because it contains separate parts for different clients. Such a system is defined by mainstream commercial banks based on a traditional bank intermediation model on the one hand, and inclusive finance based on a disintermediated, or shadow banking model, on the other. My study uses the example of two deposit-taking microfinance banks to show how contemporary financial systems in the Global South tend to contain an “outside” as well as an “inside”. As such, I draw attention to how shadow banks shape inclusive finance and limit financial citizenship, causing uneven access to finance, characterized by inequities in (1) rates, (2) requirements, and (3) surveillance. These inequities complicate and limit financial citizenship in spaces where shadow banking subsumes inclusive finance.

Item Type: Article
Additional Information: Uneven access to finance became an institutionalized feature of Pakistani banking when policymakers, including the central bank, adopted microfinance as a strategy to meet credit constraints and also reduce poverty. This consensus resulted in a separate prudential framework to regulate microfinance banks when the Khushhali Bank Ordinance, a parliamentary act was passed in 2000. Pakistan’s first microfinance bank, Khushhali Bank was thus established – as an extension of liberal financial reforms – in August 2000 as a deposit-taking institution regulated by the State Bank of Pakistan. Khushhali Bank was jointly owned by 16 commercial banks, most of which were state-owned; it also received financial support from the Asian Development Bank’s Microfinance Sector Development Program and became the centerpiece of a national poverty reduction strategy. Khushhali Bank enjoyed a quasi-public status until 2012 when a consortium of local and foreign private investors acquired the pioneering institution.
Uncontrolled Keywords: development,financial citizenship,financial inclusion,financialization,inclusive finance,pakistan,shadow banking,geography, planning and development,economics and econometrics,sdg 1 - no poverty,sdg 5 - gender equality,sdg 8 - decent work and economic growth ,/dk/atira/pure/subjectarea/asjc/3300/3305
Faculty \ School: Faculty of Arts and Humanities > School of Politics, Philosophy, Language and Communication Studies
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Depositing User: LivePure Connector
Date Deposited: 09 Jan 2023 10:32
Last Modified: 09 Jan 2023 10:32
DOI: 10.1080/15387216.2021.1980074

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