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Financial Markets in Bangladesh: Prospects AND Apertures

The document discusses the major financial markets in Bangladesh including the money market, treasury bond market, capital market, and foreign exchange market. It describes the key participants and operations in each market. It also examines the non-depository financial institutions that operate in Bangladesh and their various functions. Finally, it analyzes some of the major risks faced by financial institutions in Bangladesh such as credit, interest rate, liquidity, operational, and regulatory risks.

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48 views

Financial Markets in Bangladesh: Prospects AND Apertures

The document discusses the major financial markets in Bangladesh including the money market, treasury bond market, capital market, and foreign exchange market. It describes the key participants and operations in each market. It also examines the non-depository financial institutions that operate in Bangladesh and their various functions. Finally, it analyzes some of the major risks faced by financial institutions in Bangladesh such as credit, interest rate, liquidity, operational, and regulatory risks.

Uploaded by

atiqul-2020214784
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPTX, PDF, TXT or read online on Scribd
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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

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