Abstract:

This study tests the efficacy of the Bank Reform Plan (2004-2009) in enhancing bank efficiency and attaining the most urgent macroeconomic objectives of reducing unemployment, stabilizing prices and managing national debt amidst the global financial crisis (GFC). The Pedroni Fully Modified Ordinary Least Squares (FMOLS) method is employed for the period from 2003 till June 2010. The overall results reveal that recent bank reforms have helped the economy to weather the impact of the global economic meltdown, but the contribution differs from one category of banks to another. Foreign banks are more efficient in stabilizing prices, while state banks in creating jobs and financing national debt. Private domestic banks are quite functional in job creation and financing debt.