The Relationship of Deposits with Profit Rates and Advances with Mark-up Rates in Pakistan

Abstract

This article is regarding banking industry of Pakistan. The paper examines the extent to which deposits and advances are dependent on profit and mark up rates respectively. The required data on all the public sector banks and two private banks for six years (1999- 2004) were obtained and analyzed using regression analysis. The results show that the relationship is quite strong in case of saving and current deposits. It has further been concluded on the basis of this analysis that there is a strong Correlation between advances and mark up rates.