Professional Documents
Culture Documents
on
Financial market indicators of
Bangladesh
Principal of Finance
(EIB-508)
Prepared for
Mohammad Rakib Uddin Bhuiyan
Associate Professor
International Business
University of Dhaka
Prepared by
Manush Dhar, Id:801827022
Ridwan Bayezid, Id:801925022
Nur-E-Makshud, Id: 801928023
Nurnobi Raja, Id:801928028
Sajib Chandra Roy, Id: 801928036
Introduction:
Overview of Financial system of
Bangladesh:
The financial system of Bangladesh is comprised of three broad fragmented sectors:
Formal Sector,
Semi-Formal Sector,
Informal Sector.
The sectors have been categorized in accordance with their degree of regulation.
The Formal sector includes all regulated institutions like Banks, Non-Bank Financial Institutions
(FIs), Insurance Companies, Capital Market Intermediaries like Brokerage Houses, Merchant
Banks etc.; Micro Finance Institutions (MFIs).
The Semi formal sector includes those institutions which are regulated otherwise but do not
fall under the jurisdiction of Central Bank, Insurance Authority, Securities and Exchange
Commission or any other enacted financial regulator. This sector is mainly represented
by Specialized Financial Institutions like House Building Finance Corporation (HBFC), Palli
Karma Sahayak Foundation (PKSF), Samabay Bank, Grameen Bank etc., Non Governmental
Organizations (NGOs and discrete government programs.
The Informal sector includes private intermediaries which are completely unregulated.
Financial Market:
Markets in the financial sectors are fundamentally places where investors or
lenders and borrowers come together to exchange financial assets.
Here, investors or lenders posses funds that they are willing to invest in return for
a profit.
And, borrowers take funds for any given reason.
Financial System:
Types of Financial Markets in
Bangladesh:
In the capital market, both equity and debt instruments, such as equity shares, preference
shares, debentures, zero-coupon bonds, secured premium notes and the like are bought and sold,
as well as it covers all forms of lending and borrowing.
Comments:
The central bank controls the entire operation of the organized sector of the money market.
Some problem due to unorganized the money market of Bangladesh have been seen there
which are arising for the liquidity crisis, non-performing loans, growing gap between lending
and deposit growth, widening current account deficit, a distortion in the interest rate market
and a lack of skilled manpower.
Indicators on Bangladesh Foreign
Exchange Market:
Major Indicators:
Exchange Rates
Inflation Rates
Interest Rates
Level of activity & employment
Remittances
Foreign Exchange Reserves
Foreign Exchange Regulations (Foreign Exchange Regulation Act 1947)
Exchange Rates:
Remittances:
Have a stabilizing effect on the foreign exchange market.
Average (2014 – 2019) : 1202.85 Million USD/month.
Foreign Exchange Reserves of Bangladesh:
Steadily Increasing.
Current : 32235.70 Million USD (February, 2019)
Other indicators:
Comment:
The foreign exchange market of Bangladesh has been going through volatility. In the last 2
years, the inter-bank exchange rate of USD has risen almost 6 points, from Tk78.88
(January,2017) to Tk84.35 (April,2019).
The goal should be to stabilize the market.
Financial Derivative Market of
Bangladesh:
Multinational
Market for A futures contract
corporations
Derivatives is almost to manage
utilizing futures and
non-existent exchange-rate risk
forward contracts
Derivative Products:
• Forwards
Four main types • Futures
of derivatives • Options
• Swaps
contracts
Roles Of Derivative Market:
Market Efficiency:
Risk Management : exploiting any profit
opportunities that arise from the
keeping risk at a desired level
discrepancy in prices of the
identical assets
Derivative
Market