This study aims to develop a financial stability index for the Pakistani financial sector by using the financial reports for the period of 2001–2011. Specifically, we constructed three different classes of indices in this study based on a variance-equal weighted approach, a linear probability...

World economies during the last century have witnessed a number of financial and banking crises resulting in tremendous loss in inflicted economies. The severity of these losses prompted Prudential authorities (World Bank, European Central Bank, International Monetary Fund -IMF and Central Banks...