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In this study, Ordinary Least Square (OLS) technique has been used. In order to run the OLS model, order of integration of every variable is determined. There are two methods to examine the order of integration i.e. Augmented Dickey-Fuller (ADF) test and Phillps-Perron test. In this study, we will use ADF test for examining weather the data is stationary or non-stationary. We will run co-integration test when all variables becomes stationary at same level. The generalized form of data has been used in this study.

In model 1, liquid liabilities have been used as an indicator of banking sector development. Table 1 show that Real GDP, Financial Liberalization and Trade openness are statistically significant and Discount rate is not statistically significant to the development of banking sector in Pakistan. However, Trade openness is inversely related with liquid liabilities which means that increase in trade openness will eventually affects the development of banking sector. While, Real GDP and Financial liberalization have a significant impact on the banking sector development i.e. higher Real GDP and Financial Liberalization in Pakistan will leads towards development of banking sector. R square is (.99) which shows substantial explanation of independent variables in dependent variables.

In model 2, we have used Private sector credit as an indicator of development of banking sector in Pakistan. Results of table 2 indicate that discount rate and trade openness have significant impact on the development of banking sector. However, Trade openness is inversely related to the banking sector development. Financial liberalization and Real GDP are not found statistically significant. R square of model 2 is (.34) which shows that independent variables are explaining 34 % of the dependent variable.

In model 3, we have used domestic credit as an indicator of banking sector development. Results of table 3 indicate that all variables are statistically significant to the development of banking sector of Pakistan. R square of model 3 is (.99) which shows that independent variables have a significant impact on the dependent variable. (Goldsmith, 1969)

As mentioned above, generalized form of data has been used in this study and numbers of tests have been applied on these three models and there is no serial correlation, heteroscedasticity.

CONCLUSION AND DISCUSSION

The results of this study shows that Trade openness is inversely related to the development of banking sector in Pakistan in all three models which validates the findings of (Siddiqui & Iqbal, 2005) that Trade openness negatively affects the economic growth of a country. However these results are not according to the findings of (Miller & Upadhyay, 2000) which states that trade openness leads to the development of financial sector. Moreover this study also does not 本论文由英语论文网提供整理，提供论文代写，英语论文代写，代写论文，代写英语论文，代写留学生论文，代写英文论文，留学生论文代写相关核心关键词搜索。