Mohammad Sediq Nawabzada

Abstract

 

Commercial banks are an essential part of the financial system without existence of whom the smooth and efficient running of business activities encounter challenges and problems. This research study is mainly aimed at analysing and describing the role and importance commercial banks play in the domestic trade of Afghanistan. Furthermore, the study also looks into the problems and challenges that the banking and trade sectors currently face in Afghanistan. This descriptive analysis is supported by primary data from commercial banks and traders/business owners operating in Afghanistan as well as data from other valid sources. The findings of the research study indicate that the banking industry in Afghanistan has significantly developed in terms of quantity and quality over the past one and a half decades, though there have been problems and weaknesses identified including the lack of managerial skills, misuse of the banks’ capital by managers/owners (e.g. the case of Kabul Bank), failures in complying with regulations, and lack of internal controls. The trade sector and business practices still remain in traditional forms and have not been successful in benefiting from the services and facilities provided by commercial banks in Afghanistan. A High rate of illiteracy and lack of awareness about banks among business people have resulted in failing to attract financial services from commercial banks.

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