Outgrowth Of Consumer Financing: Positive or Negative!

Many of the people do criticize the commercialization of banking services, i.e. especially the consumer financing holding that they’ve led the people to spend more and more on useless things, but if we see from increasing consumption leading to increased production and GDP point of view, the economies have really grown. Though the macro economy has got most of this growth, but the ease and comfort at users’ end, i.e. from credit card debt relief to car financing and house financing it’s served the people on micro level.

It’s no doubt an endless debate, but the growing economies of the world have outshown the concept of supply according to the consumers’ demand. In this contest, Pakistani economy has also seen the outgrown macro economy in the past few years, and this growth has served the people to a specific extent as well. Yes, there lies a negative aspect, as nothing in the world is 100% complete so is the case with this growth and development. This negative aspect is the uncontrolled poverty and inflation.

Well, these are the challenges for the forthcoming rulership on one hand and for the economy experts on other. Let’s see how can we improve or at least can do just a cut above.

3 Responses

  1. This is great post..i personally think that consumer financing give a relief to low income earners as now they can enjoy those goods which cost much and beyond their purchasing power .

  2. In my view when there is a real growth in macro economic indicators,it effect are trackkelled down to micro economics.in pakistan GDP groth is not real rather its inflatory.
    Yes consumer financing has raised the aggregate demand,but on the other hand it has lead to uncontrolable inflation.
    an other aspect of boost in consumer finance in pakistan is that most of the growth is wittnessed in the area of auto finance,that mostly benefits the foreighn industry.
    Consumer financing would be more beneficial for the society ,if is diverted to financing of basic naccties and localy produced goods.
    Home finacing is another area that may help the middle class,but too much technacalities and formalities prevent the prospective borrower to obtain finance from banks.

  3. There is nothing wrong in principle with banks enhancing their product range to provide their customers with credit facilities. However it is imperative that it is done in a responsible and gradual way since you cannot expect people to necessarily show self-restraint if they are uneducated in the use of credit. Also adequate regulation should be in place so that the public are not taken undue advantage of, e.g. excessive penalties, high charges etc. Since I am not living in Pakistan, perhaps someone else can elaborate on how the system currently works? I would be interested to know more. Good post by the way.

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