Capital Market Of Bangladesh Research Articles

AN ANALYSIS ON THE ROLE OF STOCK BROKERAGE HOUSES IN COMMUNITY DEVELOPMENT

This study investigates the role of stock brokerage houses in community development within the context of Bangladesh's capital market. Data and information are sourced from a variety of secondary sources, encompassing financial platforms like the Dhaka Stock Exchange (DSE) and Chittagong Stock Exchange (CSE), credible news websites such as Investing.com, published literature, and official reports from regulatory authorities such as the Bangladesh Bank and the Bangladesh Securities and Exchange Commission (BSEC). Quantitative data spanning the period from 2010 to 2019 are meticulously extracted from stock exchange databases as well as the IMF World Economic Outlook database. These datasets are meticulously structured and analyzed using tables, charts, and graphs. Amidst challenges such as market collapses and the COVID-19 pandemic, the resilience and growth of Bangladesh's capital market are evaluated. The results reveal that brokerage houses have a significant impact on community development in Bangladesh. For instance, the total traded volume reached Tk. 2,169,597 million in 2017, marking an 82.08% increase from the previous year. Sector-wise turnover data showed consistent investment trends, particularly in manufacturing, financials, and pharmaceuticals. These investments have led to job creation and infrastructure development, highlighting the role of brokerage houses in fostering employment and socioeconomic advancement. Additionally, the adoption of online trading platforms has driven technological advancement and financial inclusion. The findings of this study suggest that brokerage houses are crucial intermediaries in the capital market, contributing to economic growth, financial inclusion, and community development through their investment activities and corporate social responsibility initiatives.

Investment Decisions of the Individual Investors in the Capital Market of Bangladesh

Investment decisions of the individual investors in the capital market are influenced by various factors. Main objective of this study is to find out the influences of the factors on investment decisions of individual investors in the capital market in Bangladesh. A highly structured questionnaire has been used to collect primary data from 384 individual investors who are traded in the Dhaka Stock Exchange (DSE). The study respondents have been selected at a simple random method. Analysis of variance (ANOVA), multiple regression model, graphs, charts and tabular analysis have been used to analyze collected data and to test hypotheses of the study. The results showed that EPS has positive influence (β=0.0682, t=1.2439 and p=0.2143, test of hypothesis 2) on investment decisions and rank of EPS is 4 with mean score of 3.8099 and S.D=0.5087 (table 3). It has also found that dividend has positive relationship (β=0.0590, t=1.1054 and p=0.2697, test of hypothesis 3) with investment decisions and dividend is ranked 6 with mean score of 3.5755 and S.D=0.5593 (table 3). Accordingly, P/E ratio has a negative influence (β =-0.0069, t=-0.1341 and p=0.8934) on investment decisions of the individual investors. Therefore, this study will be very helpful to the individual investors to make correct investment decisions by analysing EPS, dividend trends and P/E ratio of the company.

Capital Market Efficiency and Economic Growth: Evidence from Bangladesh

This study explores the influence of capital market efficiency on Bangladesh’s economic growth, using time series data covering market capitalization, total market turnover, and stock price indices from 2011 to 2022. The application of a multiple regression model reveals that the Bangladesh capital market has the potential to contribute significantly to the country’s economic growth. This potential is attributed to the notable characteristics of high market capitalization and relatively robust market liquidity. Consequently, it is recommended that market organizations and regulations be structured to attract a substantial number of both domestic and foreign investors, encouraging substantial listings, investments, and trading. Such measures are crucial to achieving the central objective of optimally allocating economic resources for the sustained and resilient growth of the nation.

A search of investors' trading practices in the Bangladesh capital market

PurposeThis research mainly intends to ascertain the stimulus of investor investment tendencies on the amount of capital investment in the share market.Design/methodology/approachUtilizing a sample of 477 individual investors who actively trade on the Bangladesh capital market, this empirical study was conducted. The objective of this examination is to ascertain the investment trading behavior of retail investors in the Bangladesh capital market using multiple regression, hypothesis testing and correlation analysis.FindingsThe coefficients of market categories, preferred share price ranges and investment source reveal negative predictor correlations; all predictors are statistically significant, with the exception of investment source. Positive predictive correlations exist between investor category, financial literacy degree, investment duration, emotional tolerance level, risk consideration, investment monitoring activities, internal sentiment and correct investment selection. Except for risk consideration and investment monitoring activities, all components have statistically significant predictions. The quantity of capital invested in the stock market is heavily influenced by the investment duration, preferred share price ranges, investor type, emotional toleration level and decision-making accuracy level.Research limitations/implicationsThis investigation was conducted exclusively with Bangladeshi individual stockholders. Therefore, the existing study can be extended to institutional investors and conceivably to other divisions. It is possible to conduct this similar study internationally. And the query can enlarge with more sample size and use a more sophisticated econometric model. Despite that the outcomes of this study help the regulatory authorities to arrange more informative seminars and consciousness programs.Practical implicationsThe conclusions have practical implications since they empower investors to modify their portfolios based on elements including share price ranges, investment horizons and emotional stability. To improve chances of success and reach financial objectives, they stress the significance of bettering financial understanding, active monitoring and risk analysis. Results can also be enhanced by distributing ownership over a number of market sectors and price points. The results highlight the value of patience and giving potential returns enough time.Originality/valueThis study on the trading behavior of investors in Bangladesh is unique and based on field study, and the findings of this study will deliver information to the stakeholders of the capital market regarding the investors’ trading behavior belonging to different categories, financial literacy level, investment duration, emotional tolerance level and internal feeling.

The Impact of Companies’ Listing into Capital Market on National Tax Revenues: The Case of Bangladesh

Capital market of Bangladesh is in a race of development; the growth of which has been significantly increasing since the last decade. The motivation of tax policy for bringing more participation of fund raisers into the capital market is relatively important to consider. Thus, the study on “The impact of companies' listing into capital market on national tax revenues: The case of Bangladesh” was founded on finding whether the curtailed tax liability percentage applicable to the listed companies relative to the unlisted companies is sufficient to face the tax revenue outputs from the listed companies relative to the unlisted companies. The study considered only the corporate tax of pre-IPO financial statements and post-IPO financial statements. The study has tried to discover the tax differences between the datasets in different paradigms. With data from feasible time frame, and application of feasible methodology, it has been found that, even if tax percentage is lower to listed companies than to unlisted companies, the average tax disbursed by the listed companies to government is much higher than the unlisted companies which indicates a very positive guideline to policymakers for motivating companies with curtailing tax percentage to another level and increasing number of listed companies and total tax revenues simultaneously.

Capital Market and its Prospects and Problems in Bangladesh

A country's whole financial system may depend on a healthy capital market. Bangladesh's capital market is far less developed than that of many other nations, including those of its neighbors. In 1976, the capital market in Bangladesh was given a new lease of life. The market has been volatile ever since then. In recent years, the market has reached new heights on a near-constant basis. Inadequate financial depth, product diversity, uniformity of the supporting legal and regulatory framework, and similar issues continue to plague the country's capital market despite the many improvements made over the years. Although facing several internal and external obstacles, the market's potential is highlighted in this report. There have been proposals for new policies to inject the market with more energy, making it an instrument of the rapid economic development the government has prioritized.

Effect of Margin Loan on Investment Behavior and Performance: Insights from the Capital Market of Bangladesh

Effect of Margin Loan on Investment Behavior and Performance: Insights from the Capital Market of Bangladesh

Stock Market Trading through Mobile Application: An Analysis of Reaction to COVID-19

This article aims to assess the need for a stock market mobile trading application in a developing country's capital market, such as Bangladesh's, where stock markets have been closed for more than two months during the first stages of the ongoing pandemic. The effect of COVID-19 is tested using an event study to evaluate if it has a statistically significant impact on the adoption rate of the DSE mobile app. A descriptive research approach has been implemented, and a t-statistic has been conducted. According to the statistics, COVID-19 significantly impacts the DSE mobile app adoption rate and the number of buy-sell transactions in Bangladesh's capital market. Compared to the total Beneficiary Owners account holders, only 3.75 percent of investors use the DSE mobile app for transactions. All of this indicates that the stock market in Bangladesh has only partial digitalization, and as a result, it does not provide a suitable platform for coping with negative occurrences. As a result, authorities must encourage the adoption of full-fledged digitizing by involving all stakeholders in the chain to deal with the sudden and long-lasting shock caused by pandemics such as the coronavirus epidemic in 2019.

Scope of a Common Trading Platform for Brokerage Firms in Bangladesh Capital Market

Financial sector in Bangladesh has become digital friendly over the years, which has reflected on better customer satisfaction and operational efficiency. However, for Capital Market Intermediaries, this has not been reflected, except for some few major players. In this paper we are trying to identify the scope of a common digital platform which can be used for majority brokerage houses and the benefits this can provide. We have also tried to figure out the key considerations for which digital platforms have not been popularized yet and what can be done to popularize this. We believe that, with the support being provided by BSEC, a common platform can be readily introduced and can be introduced better customer satisfaction and operational management.

Prospects and Challenges of Bond in Bangladesh Capital Market: A Comparison with Asian Capital Markets

The bond market always plays a complementary role in allocating funds from surplus sectors to different deficit sectors. In Bangladesh, an efficient bond market can play a vital role in supplementing the banking system to meet the requirements of the corporate sector for long-term capital investment and asset creation while providing a steady source of finance in the event of equity market volatility. The study has explored the prospects and challenges of the bond market in Bangladesh using secondary data from abundant sources. The study has addressed that the amount of tradable government bonds is negligible, secondary trading of government bonds is infrequent, and there has been scarcely any public issue of corporate bonds. It is observed that the bond market remains mostly underdeveloped to finance the large infrastructural projects in Bangladesh. The study has also compared the bond market of Bangladesh with twelve Asian nations and revealed that Bangladeshi bond market appears to be very insignificant in terms of the size and the corporate bond to Gross Domestic Product (GDP) ratio relative to those of countries. There are a plethora of impediments to the expansion of the bond market in Bangladesh, which have been attributed to major structural issues such as low investor base, absence of benchmark yield curve, lack of investor awareness and high issuance cost. For the smooth operation of a deep and liquid bond market in Bangladesh, a comprehensive regulatory framework, bond investment-friendly administrative infrastructure, and augmented investor incentives are recommended. It is a message of optimism that the regulatory authority has already taken initiatives to introduce several bonds with various features to make the capital market more vibrant.

AN ANALYSIS OF THE IMPORTANCE OF RESEARCH AND DEVELOPMENT: EVIDENCE FROM CAPITAL MARKET OF BANGLADESH

There are various economic indicators that demonstrate the strength or weakness of a country's economic condition and Gross Domestic Product is one of them, with capital market turnover contributing significantly to GDP. The broad objective of the study is to show an analysis of the importance of research and development of capital market of Bangladesh. And also is to provide identify the investors perception about the research and development of capital market of Bangladesh and give some recommendations and strategic insight to improve the quality research to contribute on future development of the capital market of Bangladesh. Moreover, How Capital Market Research will help to improve the capital market growth, finding new opportunities, diversifying market products and segmentations, improving Market efficiency, attracting foreign investment, increasing liquidity as well as making investment decisions. The research is based on a structured questionnaire survey procedure. The findings revealed that investors are interested in investing in the secondary market with lack of enough knowledge, confidence and market expertise.

Assessment of Capital Market Efficiency in COVID-19

The study tries to focus on the efficiency of the capital market through investigating the randomness of return series of Dhaka Stock Exchange of Bangladesh. Due to COVID-19 pandemic the worldwide capital market faces higher volatility than before. The study finds the week form of efficiency level of Bangladesh capital market. Special focus on Run test, Auto correlation test, predictability of tock return using ARIMA model the weekend effect anomaly and momentum strategy investing. The study found that the hypothesis of randomness of the stock returns are rejected for stock price index changes by using random walk tests, normality of return distributions, runs test and at different lags using ARIMA and the momentum tests which assert Dhaka Stock Exchange is not efficient even in the weak form.

Incorporating SMEs in the Capital Market of Bangladesh: Obstacles, Initiatives and Potentials

The Stock Exchanges of Bangladesh have initiated a new window for small and medium enterprises so that they can get finance by issuing securities. Though 80% of the business in Bangladesh are SMEs, which are responsible for 25% of nation’s GDP and 35.49% of the total workforce, limited access to formal financing impedes their effective operations and long-term growth. As a new platform, the insights related to obstacles of listing and fundraising, regulatory issues, and the future potentials remain uncovered due to lack of research initiatives. This study addresses these insights by analyzing both primary and secondary data. The study findings outline that SMEs now have the opportunity to trade-off between loans from creditors and financing by issuing securities. The decision mostly depends on whether a firm has enough collateral to avail loan from creditors, or it is prepared enough with proper documentation, standard books of accounts and regulatory issues of the capital market. While estimated fundraising costs through the capital market stand at 0.6% to 1.03%, banks and financial institutions charge 13% to 17% for interest along with 1% to 2% for processing fees and stamp duty. However, the capital market demands limited liability company, asset valuation, standard books of accounts, tax filing, reporting and disclosure issues. The regulators have developed the platform as a learning ground by following ‘Go Easy’ principles so that the SMEs can exercise reporting and governance issues, and contribute to institute a transparent and sustainable capital market in the future. Keywords: SME, financing, capital market, small capital platform, stock exchange DOI: 10.7176/JESD/12-2-03 Publication date: January 31 st 2021

Dividend Policy and Stock Price Volatility in the Bangladesh Capital Market: An Experimental Analysis

Dividend Policy and Stock Price Volatility in the Bangladesh Capital Market: An Experimental Analysis

Legal And Regulatory Framework of Islamic Financial Services in Bangladesh with Special Reference to the Islamic Capital Market: A Way Forward

Sustainable economic growth is the prime concern of today’s globalized world. Money markets around the world are functioning as key players to realize that goal and often looking for new avenues to increase the capital that may embolden overall growth of the economy of a country. This paper, adopting a doctrinal method, has tried to explore the legal barriers responsible for non-practicing the Islamic capital market in Bangladesh. The study has mainly focused on certain laws of Bangladeshi legal system that function as key legislative directives in governing Islamic financial services, with special reference to the capital market through legal infrastructure in Bangladesh. It has examined the relevant laws and regulations of the existing legal system prevalent in the capital market of Bangladesh influencing the promotion and proliferation of capital through strict compliance by companies and the protection of investors in terms of realizing profit without any hindrance. The study has further investigated the modus operandi of Islamic banks as found in the Capital Market of Bangladesh and scrutinized the major challenges and potentials thereto. Given the legal and regulatory practices prevalent in the Islamic capital market of Bangladesh, the present work concludes that the capital market of Bangladesh suffers from the lack of integrated Shariah-compliant legislations, which would govern and regulate the Islamic capital market more effectively. Accordingly, the paper proposes recommendations to help the Islamic capital market grow and foster the national economy.

International economic policy uncertainty and stock market returns of Bangladesh: evidence from linear and nonlinear model

This paper explores the relationship between international economic policy uncertainty (EPU) and stock market return of Bangladesh. The study considers economic policy uncertainty of six big trading partners of Bangladesh: US, Canada, EU, China, Russia, and India. We apply time-varying linear (Break-least Square) and non-linear (Markov-Switching) regression approaches by using monthly data from January 2003 to April 2019. Our findings indicate the following. Firstly, The break-least square captured four structural breaks in the capital market of Bangladesh. Secondly, economic policy uncertainty from major importing countries (China and India) affect stock market returns of Bangladesh more significantly than major exporting countries (US and EU). Thirdly, EPU has a greater negative influence on stock returns during high volatility than low volatility regime. A number of policy measures have been recommended.

Day of the week effect anomaly in Dhaka Stock Exchange post crisis period: evidence from Bangladesh capital market

Day of the week effect anomaly in Dhaka Stock Exchange post crisis period: evidence from Bangladesh capital market

Day of the week effect anomaly in Dhaka Stock Exchange post crisis period: evidence from Bangladesh capital market

This study examines day of the week effect anomaly in Dhaka Stock Exchange (DSE), during post crisis period. The Bangladesh stock market crashed on 19 December 2010, and the stock market remained sluggish for long time. This study used the daily closing prices of two important indexes (DGEN and DSI) during post crisis period, from 19 December 2010 to 31 December 2013. Regression statistics modelled with dummy variables, one-sample T-test statistics, paired-sample T-test statistics and ANOVA (one-way) for parametric test and Kruskal-Wallis and Wilcoxon signed rank test for non-parametric test, have been used to observe the day of the week effect anomaly in DSE. The results revealed irregularities in daily mean returns with different returns volatility in week. The study provides implications for policy makers to develop appropriate post-crisis policy tools and incentives to re-stabilise the market.

DOES MARKET REACT TO TAX REDUCTION NEWS? AN EMPIRICAL STUDY ON CORPORATE TAX REDUCTION OF BANGLADESH IN 2017-18

Purpose – This study tries to investigate the capital market reaction to the corporate tax reduction announcement (37.5% from 40%) in Bangladesh for publicly listed Banking, Insurance and Financial Institutions of 2017-18. Methodology – This study applied an event study approach to identify any significant average abnormal returns as well as cumulative average abnormal returns of all the publicly listed Banks, Insurances and Financial institutions around the announcement period. Findings – Insignificant average abnormal return (AAR) experienced in case of Banking and Insurance industry on event day, except the financial institutions which have generated a statistically significant abnormal negative return on announcement day. The combined AAR of all three sectors has also generated statistically insignificant return around event windows which suggest that investors did not consider tax reduction news as valuable information for investment decision nor considering it as an essential factor of share value. Limitation – The study did not consider any possible extraneous variable that could result in insignificant reactions. Practical Implication – The findings of this research would considerably contribute to the financial and economic policy formulation while taken into consideration the possible impact of the policy over the capital market of Bangladesh. Originality – This study makes a considerable input to the research in the area of taxes linked to the behavioural finance applying the unique variable of investor’s reactions.

Determining the Dependency Pattern of Daily Change (increase or decrease) of Dhaka Stock Exchange Index (DSEX) in Bangladesh by Markov Chain and Logistic Regression Model

Bangladesh's capital market is South Asia's third largest market with two stock exchanges controlled by the Securities and Exchange Commission (SEC), namely Dhaka stock exchange (DSE) and Chittagong stock exchange (CSE). DSE introducing DSE broad index (“DSEX”) and DSE 30 index (“DSE30”) that effect from 2013. In this study, DSEX which reflect 97% of the total equity market capitalization is considered and focused the effect of change of index on market investment. The logistic regression (LR) model is performed in conjunction with the Markov chain (MC) of different order to represent the dependence of change (increase or decrease) of the current index upon the change of the previous two-time period. It was shown that the increased index day of the preceding two-time period relative to the decreased index day of the preceding two-time period affects the increased index day of the present time period. We observed a dependency of increase-decrease index of spell for the occurrence of index in the Dhaka stock exchange from the period of 28/01/2013 to 30/04/2019. The result shows that the frequency of index shift follows a second order Markov chain and logistic regression suggests that decrease index day of index followed by decreased and increase day of index followed by increased is more likely for the index of Dhaka stock exchange. This research helps to the individual investors in predicting the next day’s stock price based on the prior two days index price. This study also contributes to researchers, corporate managers and other personnel to determine the dependency pattern of stock price.