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A number of variables in an economy may be affected by seasonal influences such as weather conditions, trade practices, traditions, customs, etc. Since these variations recur year after year with an approximately constant degree of relative intensity and regularity, it is possible to make predictions about such seasonal variations. The present study attempts to measure the seasonal variations in some major balance sheet items of scheduled banks in Pakistan. The Link Relatives Method has been used in the construction of the seasonal indices. In most cases, the arithmetic mean of the link relatives is taken for the deri¬vation of the index. In cases where the variation in the link relatives is signi¬ficant, the median is used for the construction of the index. The study consists of three sections. The first section presents the indices of the balance sheet items of scheduled banks and relates some of these indices to each other and to certain important monetary variables. The second section presents the seasonal variations in the allocation of scheduled bank lending to various sectors of the economy. The third section spells out some of the implications of these indices. The study covers the period 1953-60 except for a few items1. A period of only 8 years cannot be considered long enough to enable us to predict with confidence the seasonal variations in the future. But these indices may give some indication of the nature of seasonal movements in the activity of scheduled banks in Pakistan.

Discussions about the role of small enterprise in economic development tend to remain inconclusive partly because of the difficulty of assessing the relative importance of economic and non-economic objectives and partly because of the dearth of factual information on which to base an economic calculus. It is probably true, moreover, that, because of a lack of general agreement as to the economic case for or against small enterprise, non-economic considerations, including some merely romantic attitudes toward smallness and bigness, tend to exert an undue influence on public policies. There may, of course, be no clear-cut economic case. And noneconomic considerations should and will inevitably weigh significantly in policy decisions. If, however, some of the economic questions could be settled by more and better knowledge, these decisions could more accurately reflect the opportunity costs of pursuing non-economic objectives.

On January 15, 1959, bank rate was raised in Pakistan from its traditional level of 3 per cent to 4 per cent. This paper examines the effect of this rise of one percentage point in the bank rate on the borrowings of scheduled banks from the State Bank, their reserves, their lending rates, the supply of their credit, and the allocation of their credit among various sectors of the economy. This is done by comparing the values of certain relevant variables primarily in the year before the bank-rate change (1958) and the year after the bank-rate change (1959). From this examination of a single experience in Pakistan, it is not desired to prove that the bank rate would be effective or ineffective in future. It would, however, be unwise to ignore this bit of historical evidence in the country. The assessment will certainly give some idea of what to expect in future in comparable circumstances. A rise in bank rate may be effective in curtailing scheduled bank credit in two different ways. First, it may be an effective way of announcing to both the banks and the public the direction of State Bank policy. Scheduled banks may become cautious as a result of this, and may, therefore, refuse to lend as much as previously at a given rate of interest. Second, a higher bank rate would make it costlier for scheduled banks to borrow from the State Bank. Scheduled banks may maintain relatively higher reserves after an increase in the bank rate because they know that in the event they have to borrow from the State Bank, it will be at a higher rate. However, bank rate would become a penalty rate only if the scheduled banks do not have excess reserves, need to borrow from the State Bank, and the bank rate exceeds the rate charged by scheduled banks.

A number of variables in an economy may be aifectedby seasonal influences such as weather conditions, trade practices, traditions, customs, etc. Since these variations recur year after year with an approximately constant degree of relative intensity and regularity, it is possible to make predictions about such seasonal variations. The present study attempts to measure the seasonal variations in some major balance sheet items of scheduled banks in Pakistan. The Link Relatives Method has been used in the construction of the seasonal indices. In most cases, the arithmetic mean of the link relatives is taken for the derivation of the index.