The paper empirically investigates the relationship between bank, stock market and economic growth in Bangladesh. Three possible regression models are estimated to know the relationship between economic growth and financial sector development. In assessing impact of stock market development on economic growth, no significant long-run relationship is found between stock market development and economic growth in Bangladesh. However, net positive subdued short-term effect of stock market development is evident.
The research aims are to evaluate the growth and development of existing financial instruments and to recommend for introducing new financial instruments in the capital market of Bangladesh.
The data are taken from the Dhaka stock exchange for the year to for interpretation of development and the data from to are taken for analysis and hypothesis test.
There are only five products traded including three types of bonds. The growth of market capitalization of all products is high. There is lot of scope in the market for absorbing the new products. The share of common stocks, treasury bond, corporate bond, debentures, mutual funds to total market capitalizations are The market is common stock based.
The corporate bond market is very small. So, there should be increased new financial instruments in the capital market to reduce the dependency on share only.
The proposed financial instruments are various types of preferred stock, bond, SWAP, option, futures, and forwards as recommendation. Introduction The capital market is one of the driving forces of an economy.
Capital market is the institution that provides a channel for the borrowing and lending of long-term funds for more than one year. It is designed to finance long term investments by business, governments, and households.
Capital market consists of two segments: The securities segment is concerned with the process by which firm distributes securities to the public through the primary market and then those securities are traded in the secondary markets. The non securities segments are those where banks and other financial institution provide the long term loan.
In the world capital market there are many financial instruments such as-Forward, Futures, Option: The existing instruments of the capital market of Bangladesh are Shares, debentures, mutual fund, and Treasury Bond: An efficient bond market is important for managing public debt and bank liquidity and for efficient conduct of monetary policy.
So far the bond market has played a limited role in the economy. Thus the debt market in Bangladesh is characterized by excessive reliance on bank deposits, government dominated debt instruments, non- existent corporate bond, high and risk free interest rates, absences of market based yield curve, primary auctions based activity, lack of product variation.
Now, 31 FIs Financial Institutions are operating in Bangladesh while the maiden one was established in Out of the total, 2 is fully government owned, 1 is the subsidiary of a SOCB, 13 were initiated by private domestic initiative and 15 were commenced by joint venture initiative.
Bangladesh firms tend to have reasonable access to formal finance compared to other low-income countries. In credit to the private sector amounted to about 27 percent of GDP in Bangladesh.
Although this ratio was lower than those in some counties in the region, it compares favorably with the average for low income countries 24 percent of GDP. It was only fractionally lower than the ratios in India 29 percent and Pakistan 28 percent despite their higher per capita income.
Other measures confirm this assessment of finance in Bangladesh. For example, nearly 66 percent of their investment capital, on average, came from retained earnings, while about 30 percent of working and investment capital came from banks. Consider national level data on nonperforming loans.
Some estimates put the share of nonperforming industrial loans at around 40 percent. Since banks will have to provision for non performing loans, the large number of such loans could ultimately increase the cost of capital to entrepreneurs. The problems of financial climate are poor access to credit and high cost of borrowing.
For solving these, development of secondary market for debt market and enhancement the enforcement authority and institutional capacity of the Securities and Exchange Commission are recommended.
World Bank,Washington. Conroy,conducted research on Fostering Financial Innovation for the poor. Considering financial innovation in terms of this hierarchy helps our understanding of the respective roles of policy direction as embodied in the legal and regulatory framework and of market forces as seen in the behavior of actors in the financial marketplace.
The policy decisions of governments, monetary authorities and regulators may effect change and stimulate innovation within all four domains. However, the top i. Khokon conducted research on Bangladesh Stock Market Growing? Key indicators based Assessment. This paper focuses on the growth of Bangladesh stock market over time.
The market trends in terms of market capitalization, market liquidity, market concentration, number of listings, volatility in the market index and foreign portfolio investment were considered.
The study finds that key indicators are significantly correlated.In Bangladesh, stock market returns become quite volatile with the change of political wave. Also, people living in the city areas that are familiar with the stock market, but the Literature Review Both in the context of developed and developing countries.
Responsibility. Ministers of the government, according to the Constitution of Bangladesh, are selected primarily from the elected members of House of Nation, also known as Jatiya ashio-midori.comt Ministers are heads of government departments, mostly with the .
Review of Literature In the past two decades, many researchers, financial analysts and practitioners have attempted to predict the relationship between stock market . The market-based economy of Bangladesh is the 42nd largest in the world in nominal terms, The stock market capitalisation of the Dhaka Stock Exchange in Bangladesh crossed $10 billion in November and the $30 billion mark in , and USD 50 billion in August Working conditions in public hospitals have been of great concern to health care personnel worldwide.
However, from an international perspective, there is no evidence of literature review that has been conducted on this important topic.
This study, hopefully, will help the stock market of Bangladesh to be aware of the responses of investors’ with different demographic profile during dividend declaration. Keywords: dividend, Literature Review And Hypothesis Development Traditional models are based on the assumption that market participants always behave in a rational.