This article explores the consequences of financial liberalization policy on the banking sector in Bangladesh. Following a motivating portfolio selection theor-etical model on the impact of liberalization, it applies time series techniques with annual banking sector data for the period 1981-2008. The study suggests that the main objective of financial liberalization to promote domestic private savings by raising real interest rates has not worked. No significant positive correlation is observed between domestic private savings and the real deposit interest rate.

Financial liberalization, cointegration, domestic private savings, interest rate
Time-Series Models; Dynamic Quantile Regressions (jel C22), Consumption; Saving (jel E21), Monetary Systems; Standards; Regimes; Government and the Monetary System; Payment Systems (jel E42), Financial Markets and the Macroeconomy (jel E44),
ISS Staff Group 1: Economics of Sustainable Development
South Asia Economic Journal
International Institute of Social Studies of Erasmus University (ISS)

Murshed, S.M, & Robin, I.A. (2012). Financial Liberalization, Savings and the Banking Sector in Bangladesh. South Asia Economic Journal, 13(1), 69–83. doi:10.1177/139156141101300104