Pakistani households have a significant amount of wealth majorly in the shape of residential buildings, a study by the World Bank claimed.
Expansion in financial inclusions and barriers to it in Pakistan has been much slower compared with neighbouring countries that should be addressed, the study has said.
According to the study, Pakistanis between the ages of 60 to 65 hold an averagely of 80 percent of their wealth in form of residential buildings considering it as a safe, high return and long-term trustworthy investment. The study also highlights that low financial literacy, familiarity with banking and numeracy can be difficult in other sectors of savings.
Pakistanis between the ages of 25 and 65 holding residential buildings’ net worth growing in five years mostly in the shape of houses but it also comprises of assets in the shape of land, farms, business etc. that grows rapidly after the age of 40.
The World Bank’s study namely “Life Cycle Savings in a High-Informality Setting—Evidence from Pakistan” has said that in the future financing elderly consumption would become challenging because of factors like village-risk sharing factors, population ageing, weakening family and low pension coverage.
The report has raised concerns that only 11 percent aged above 15 years and above borrow to start or expand business whereas the initial years of their businesses are spent acquiring start-up capital.
According to Findex surveys, around the age of 40 average net worth accumulation accelerates some of it through inheritance.
