Financial-Asset Accumulation by the Noncorporate Private Sector in Pakistan 1959/60 to 1965/66 (Notes and Comments)

Abdul Ghafur


A detailed investigation into the sources of domestic saving
and its uses by various sectors can provide us with a more complete
insight into behaviour with respect to saving, portfolio selection, and
the pattern of financial interrelationship among sectors. The saving(s)
of each sector is defined as the excess of its income (y) over its
expenditure on current consumption (c), i.e., s = y—c. Saving
(dissaving) by a sector is equivalent to increase (decrease) in the net
worth (NW) of that sector over the previous year. A sector that saves
must either acquire financial assets, i.e., money and other financial
claims, reduce financial liabilities or acquire real assets. In formal
terms, s = A net worth = A (financial assets — financial liabilities) +
A real assets1 [8]. It is quite clear that saving may be reflected in a
change of net financial assets or in a change in real asset; a change in
net holdings of financial assets may indicate either saving or a change
in holdings of real assets. It is even possible, albeit unusual, that an
increase in the level of financial-asset acquisition is associated with
a negative saving (y /. c) by a sector. However, while it dose not
measure the level of saving by a sector, the net acquisition of
financial assets does reflect the extent of transfer of resources (both
stock and flow) by the sector to other sectors.

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