Financialisation of households

An Express Tribune commentary by an independent economist argues that households become financialised when they rely on credit, such as personal loans, auto loans, home loans and mortgages. The writer says this borrowing drives consumption and raises the import bill. Household credit grew in advanced economies during the 1970s and 1980s, and developing economies followed from the 1990s.

Pakistan, according to the piece, saw credit card loans made easier in 2002 after the State Bank of Pakistan relaxed its rules, and auto loans rose around 320% between 2002 and 2007. The writer adds that comparable household debt-to-income data is not available for Pakistan. For comparison, the US ratio climbed from around 100% in 2000 to 130% in 2008.

On pensions, the commentary contrasts pay-as-you-go schemes, where federal spending reached around Rs1,000 billion in FY 2026, with contributory schemes that place employee and government contributions into individual accounts. It notes that in Chile fund managers once took about one-third of contributions as fees. The writer concludes that easy credit fuels a demonstration effect that lowers savings and creates a long-term consumption trend.