FINANCIAL
MARKETS IN
BANGLADESH:
PROSPECTS
AND
APERTURES
GROUP INFORMATION
Group no:01
Section: C
Name Id
MD. A. K. M. MAHMUDUL HASAN 20-036
MD. SHEIKH RASHEL 27-045
MD. MUSLIMUR RAHMAN 27-060
ATIQUAL ISLAM 27-209
INSAN KAMAL SAFAT 27-189
MD. Muslimur Rahman
ID NO: 27-060
MAJOR FINANCIAL MARKET IN BD
MONEY MARKET TREASURY BOND MARKET
• Composed of banks and financial institutions • Issues treasury bonds with various maturities
• 20 primary dealers in treasury securities (2, 5, 10, 15, and 20 years)
• Key operations: interbank clean and repo lending, • Primary auctions with 20 banks as primary
auctions, treasury bills dealers
• Active secondary market for treasury bills up to 1 year • Non-residents can participate in primary and
secondary markets (limited to bonds)
• Monthly data on trading volumes and non-
resident holdings available
MAJOR FINANCIAL MARKET IN BD
CAPITAL MARKET FOREIGN EXCHANGE MARKET
Two stock exchanges: Dhaka stock exchange and Chittagong stock
exchange
Instruments traded: equity securities, debentures, corporate Liberalization efforts since the 1990s
bonds Taka convertible on current account transactions since 1994
Regulatory oversight by Bangladesh securities and exchange Non-convertible on the capital account (restrictions on
commission (BSEC)
resident-owned capital)
Diverse array of intermediaries: stock exchanges, central
depository, stock dealers/brokers, merchant bankers, asset Repatriation allowed for profits, dividends, and capital gains
management companies, credit rating companies, Floating exchange rate regime since may 2003
trustees/custodians, investment corporation of bangladesh (ICB)
Bangladesh bank intervenes to prevent extreme exchange
rate fluctuations
NON-DEPOSITORY FINANCIAL INSTITUTIONS
•Fund source: cannot raise funds through demand deposits or
money market securities.
•Services: insurance, pension fund management, investment
opportunities, leasing, securities trading.
•Examples: insurance companies, pension funds, mutual funds,
leasing companies, investment banks.
A.K.M. Mahmudul Hasan
ID NO: 27-036
FUNCTIONS OF FINANCIAL INSTITUTIONS
• Cooperative financial organizations
• Serve members exclusively
Credit Union • Not-for-profit focus
• Affordable services
• Common goals and community
• Accepting Deposits
Commercial Bank • Providing Loans and Advances
• Crediting Funds
• Specialize in real estate financing
• Can be corporations or mutuals
Savings Institution • Governed by elected board of directors
• Example: Maitry Savings and Credit Co Operative Society
FUNCTIONS OF FINANCIAL INSTITUTIONS
• Risk Distribution
• Loss Sharing
Insurance company • Security Provision
• Accumulate capital for employee pensions
Pension Fund • Provide income in retirement
• Managed by capitalization
• Pooling of Funds
Mutual Fund • Investing in Securities
• Distribution of Returns
FUNCTIONS OF FINANCIAL INSTITUTIONS
Leasing • Diverse range of functions
• Capital market operations
company • Key sectors benefiting
• IPOs (Initial Public Offerings)
Investment • Mergers and Acquisitions
• Risk Management
Bank
Insan Kamal Safat
ID NO: 27-189
RISKS FACE BY FINANCIAL INSTITUTION OF BD
Credit Risk
Interest Rate Risk
Liquidity Risk
Operational Risk
Regulatory and Compliance Risk
RISKS FACE BY FINANCIAL INSTITUTION OF BD
Market Risk
Political and Economic Risk
Foreign Exchange Risk
Reputation Risk
Cyber Security Risk
Atiqul Islam
ID NO: 27-209
RISKS IN FINANCIAL MARKETS OF BANGLADESH
1996
Market &
Crash 2011
Faced significant chall Another major crush occurred in the Bangladesh
enges and setback1996s
over the years. financial market in 2011.
Resulted in a signific primarily associated with the Dhaka Stock Exchange
ant sto ck market crash.
(DSE).
resulted in a substan
tial loss of investor wealth
and led to protests. a stock market bubble fueled by rapid growth and
speculation.
REASONS BEHIND CRASH
Market Manipulation and Insider Trading
Weak corporate governance practices among listed companies
Slow settlement processes, outdated trading platforms, and inadequate risk management
systems
Small and medium-sized enterprises (SMEs) faced challenges in accessing finance
Political Instability
Md. Sheikh Rashel
ID NO: 27-045
FAILURE OF FINANCIAL MARKETS AND IMPACT ON ECONOMY
Economic Contraction
Banking Sector Stress
Reduction in Investment
Loss of Investors Confidence
Government Intervention
Reforms and Improvements
