Chittagong Stock Exchange Research Articles

Nexus between Non-Performing Loan and Profitability: A Comprehensive Analysis of the Banking Industry of Chittagong Stock Exchange (CSE)

Nexus between Non-Performing Loan and Profitability: A Comprehensive Analysis of the Banking Industry of Chittagong Stock Exchange (CSE)

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.

The Dynamics of Individual Investment Decisions: Evidence From The Dhaka and Chittagong Stock Exchange, Bangladesh

Research aim: Behavioural finance plays an analogous role to fundamental and technical analyses for investment decisions in the stock market. It deals with various factors that manipulate investment decisions. This study explores the factors influencing individual investment decisions in the Dhaka and Chittagong Stock Exchange (DSE and CSE) of Bangladesh. Design/Methodology/Approach: Based on existing finance theories and literature, several factors were included in the self-developed questionnaire, with data collected using random sampling. We used SPSS (Version 26) to analyse the primary data collected. In the questionnaire, there were 24 variables, and statistical analysis (multiple regression) was carried out. Research finding: There were 24 variables, five of which (i.e., investor experience, impact of P/E ratio, impact of fundamental analysis, impact of securities and brokerage firm, and impact of investor psychology) had significant impact on individual investment decisions in the CSE and DSE. Theoretical contribution/ Originality: Theories pertaining to individual investment decisions are based on individual judgment, sentiment, risk perception, and risk attitude. These mechanisms are associated with behavioural finance. Various behavioural finance studies have been conducted in developed countries, but not in developing countries like Bangladesh. As such, the dynamics of the investment decision are the main focus of the present study. Practitioner/ Policy implication: This article can serve as input to investment decisions that have an impact on economic value at the firm, industry, and macroeconomic level. Moreover, it highlights the role of related stakeholders and extent to which they influence investment decisions. Research limitation: This study is country-specific, and the number of respondents is limited to 125 only. We could not consider the impact of technological advancement during this period.

As investors sow, can they reap? Examining the moderating effect of investment opportunity on the relationship between financial literacy and investment decision

Purpose This study aims to examine the investor's level of financial literacy and their attitude toward making any investment decision in the Bangladeshi capital market. Design/methodology/approach To measure the level of financial literacy of an individual investor, three variables have been used – financial knowledge, financial behavior and financial attitude. It also considers investment opportunity as a moderator variable to assess the effect of market-specific characteristics on financial literacy. Data have been collected through a structured questionnaire from 152 retail investors of the Dhaka Stock Exchange and Chittagong Stock Exchange. Smart-PLS 3.3 was used for analyzing the set of hypotheses for examining the relationships in the study. Findings Results found that financial attitude and financial behavior have a positive and significant relationship with investment decisions. Further evidence shows that investment opportunity moderates the relationship between financial attitude and financial behavior. This indicates that equity investors are suffering from market inefficiency and cannot ensure wealth maximization. Research limitations/implications Regulators should focus not only on financial literacy programs but also on market discipline, accountability and performance. This will encourage investors to invest their money wisely and independently. Originality/value The study adds value to the capital market literature in two ways. First, it investigates the success of financial literacy programs in Bangladesh to resolve the behavioral bias issue among investors, which used to affect their returns negatively. Second, the study introduces a very new and relevant variable as a moderator in the context of Bangladesh. Investment opportunity is a moderating variable developed from the efficient market hypothesis. Results reveal that investors are somehow financially literate over time, which can be a positive attribute for controlling behavioral bias. However, market inefficiency, corporate corruption, financial crime, insider trading and information asymmetry hamper the regular growth of the market. Hence, equity investors are unable to ensure wealth maximization in Bangladesh, where this kind of problem exists.

Capital Asset Pricing Model (CAPM) Works in the Stock Market of Bangladesh: Empirical Evidence from Sector-Wise Index of Chittagong Stock Exchange (CSE)

The present study examines the Capital Asset Pricing Model (CAPM) in Chittagong Stock Exchange (CSE) with special orientation to 10 different sector indexes. They are such as Banking sector index, Energy sector index, Ceramic sector index, Food sector index, General Insurance sector index, Life Insurance sector index, Cement sector index, Leasing and Finance sector index, Textile sector index, ICT sector index of Chittagong Stock Exchange (CSE). Data were gathered from the Chittagong Stock Exchange (CSE) website (www.cse.combd) for the time frame of July 2016 to June 2019. From Bangladesh’s central bank website (www.centralbank.combd), the risk-free return (Rf) has been gathered. The study uses year-end closing price and dividend for 92 listed companies. The expected return is measured through Capital Asset Pricing Model (CAPM), which is developed by William Sharpe (1964). For analysis the data, Mean, percentage, ANOVA, ‘t’ test are used as statistical tools. Descriptive and Regression analysis have been done to find the results. The study is only confined to CSE. So, there is an avenue for further researchers to add Dhaka Stock Exchange (DSE) in their research project. This approach is applicable to both investors and issuers when exchanging shares of securities on the stock market. The study concludes that the CAPM is not applicable to the 10 distinct sector indices of the CSE because, at a typical level of risk, the gap between expected and actual returns is quite large. Hence, CAPM was tested separately for each year of the five years period and the results in the mentioned tables did not support the CAPM applicability.

Application of Altman’s Z-Score Model in Predicting Financial Distress of the Ceramic Industry: Evidence from Bangladesh

The purpose of this paper is to predict the financial position and possibility of the ceramic industry in Bangladesh. This paper uses Altman’s Original Z-Score model for predicting the financial status of the companies. The study begins with a literature review of secondary data from articles, annual reports, periodicals, newspapers, and previous research papers, and the data was collected from the industry’s annual reports published on their websites. It investigated a total of 60 annual reports during the twelve years of the five ceramic industries namely; RAK, Shinepukur, Monno, Standard, and Fu-Wang ceramic which are listed in the Dhaka and Chittagong Stock Exchange Limited. The results showed that RAK, Fu-Wang, and Standard ceramics had a mean score greater than 2.99(safe zone) in about (75%), (41.67%), and (25%) of the year respectively. Among them, the rest of the two companies failed to reach the safe zone. On the other hand, in the grey area, the highest rate was 66.67% with Monno, and Standard ceramics at 50%. In contrast, the lowest rate was in the RAK ceramics. The percentage in the grey area denotes the moderate financial position of a company. Interestingly, the highest score in the distress zone was 33.33% with Shinepukur. And in none of the years, has Shinepukur reached the safe zone. In the distress area, RAK had the lowest rate 16.67% among the five companies. Overall, in total, 28.33% of the year, Z-score reached the safe zone, of which 37% had in the Grey Zone, and 34.6% had in the distress zone.

Affects of Working Capital Management on Firm’s Performance: Evidence from Bangladesh

Working capital is a proportion of an organization's liquidity and monetary wellbeing which assesses the performance and profitability of an organization inside a limited period. The ceramic business is one the most troublesome and lengthy process industry comparing other industries. This industry is immense and includes bigger cycle which makes challenges to present the performance with genuine information. This paper is an attempt to investigate the affects of working capital management on firm’s performance of ceramic industries in Bangladesh. For this intent, ceramic corporations enrolled in Dhaka Stock Exchange (DSE) & Chittagong Stock Exchange (CSE) have been chosen and the investigation covers a period from year 2016 to 2021. Accordingly, secondary data from reputed ceramic manufacturers listed on DSE & CSE have been chosen to outline the measurable impacts of working capital management, also execution of firms by utilizing dynamic board information investigation. The results demonstrates that, inventory and cash conversion cycle periods are longer than expected. Also the industry is highly dependent on accrued sales and receiving cash from the sales are longer comparing other industry. The study clearly defines the significant level of relationship between the firm’s performances which is affected by different components of working capital management.

The Impact of COVID-19 in the Capital Market in Bangladesh

Background: COVID-19 has devastated the normal way of life. It has been raging over the globe since late January 2020. So far, 212 nations and territories throughout the world have been reported to be impacted. The viciousness of community transmission has reached its apex. Almost every country is waging a costly economic war against this epidemic. The situation of economic normality is becoming increasingly questionable as the epidemic spreads uncontrollably. Objective: In this study our main goal is to evaluate the impact of COVID-19 in the capital market in Bangladesh. Method: Data of each trading day’s last return is collected from the DSE and CSE web library. DSE and CSE All Share price Index is collected on daily and monthly basis from 2018 to 2021. Results: The capital market developments of the DSE and CSE from June 2020 to June 2021 shows that Both the Dhaka Stock Exchange (DSE) and the Chittagong Stock Exchange (CSE) showed an increased trend in terms of index and turnover at the end of June 2021 compared to the end of May 2021. The DSE broad index and the CSE all-share price index increased to 6150.48 points and 17795 points at the end of June 2021, respectively, from 5990.99 points and 17359.57 points at the end of May 2021. At the end of June 2021, the total turnover value of DSE and CSE traded shares were BDT 435.09 billion and BDT 21.3 billion, respectively, which was 40.30 percent and 37.72 percent higher than in May 2021. Whereas the ratio of market capitalization to GDP (at current market price) stood higher at 18.39 percent* at the end of June 2021which was 18.02 percent at the end of May 2021. Conclusion: COVID-19 has presented significant concerns to economic regularity and financial market stability. Nonetheless, it is anticipated that the gloomy days would pass quickly. We must be prepared to battle on if this worst-case situation lasts longer than planned. General investors must also do their role in maintaining our market image and .........

Prospects of Sukuk Bonds in Bangladesh

Sukuk has gained importance as a global financial instrument that offers financing to both the private and public sectors. Our analysis intends to determine the prospects of Sukuk bonds in Bangladesh using a descriptive analysis. The Muslim population, the size of the economy, the size of Islamic banking and excess liquidity of Islamic banks, per capita income, institutional infrastructure, the formation of a national Shariah board, and the increasing trend of Shariah-based indexes both in Dhaka and Chittagong stock exchange all these enhanced the necessity of Sukuk issuance in Bangladesh according to our studies. The Maiden Sukuk, announced in Bangladesh in 2020, was approximately four times oversubscribed, while the second auction was nearly eight times oversubscribed. Our study suggests that institutional capacity and market infrastructure for Sukuk be developed. In this scenario, an Islamic capital market as well as a Shariah-based regulatory and supervisory structure for Sukuk should be implemented.

Forecasting Index Return Volatility of The Chittagong Stock Exchange of Bangladesh using GARCH Models

Purpose: The aim of this research is to identify the best-fitted model(s) for estimating and forecasting the return volatility of the Chittagong Stock Exchange (CSE) in Bangladesh. Methodology: The study analyzes the returns of the Chittagong Stock Exchange's (CSE) daily Selective Categories Index (CSCX) from February 4, 2013 to December 31, 2021 (as a full sample) and from July 1, 2021 to December 30, 2021 (for forecasting). The researcher used GARCH family approaches considering different error distributions, to find the well-suited model(s) for the CSCX index. The researchers used ARMA to develop the mean equation based on two popular model selection criteria: Schwarz's (1978) Bayesian information criterion (SBIC) and Akaike's (1974) information criterion (AIC). The data has been analyzed using the application software E-Views 10. Findings: The ARMA (0,1) has been adopted as the mean equation for GARCH specifications. Under all three types of error distributions, the ARCH and GARCH terms, along with the leverage terms of asymmetric models, were found to be statistically significant in all the accepted combinations of the model. The models GARCH (1,2), TGARCH (1,2), and PARCH (1,2) under generalized error distributions and EGARCH (2,1) under Student’s t error distributions have been selected as the best-fitted models for estimation. Whereas, based on root mean square error (RMSE), mean absolute error (MAE), mean absolute percent error (MAPE), and theil inequality (TI), EGARCH (1, 2), TGARCH (1, 2), and PARCH (1, 2) under generalized error distributions, and GARCH (1, 2) under student’s t error distributions and normal error distributions are found to have superior out-of-sample forecasting abilities. Practical implications and originality: This is an original research work that will help the investors and other stakeholders of the Bangladeshi stock market to estimate and forecast market volatility more efficiently. Limitations: Due to its extensive features, this study was unable to incorporate a few additional ARCH and GARCH models.

A Random walk down the Dhaka Stock Exchange lane

Market efficiency has always been a matter of keen interest to the researchers of finance. Since the advancement of this concept, researchers are consistently investigating the market efficiency of different financial markets. Bangladesh, being one of the emerging economies, has also attracted the attention of many researchers. The researchers have investigated the realities regarding the market efficiency of both the stock exchanges of the country. Most of their investigations reveal that the Dhaka Stock Exchange (DSE) and the Chittagong Stock Exchange (CSE) are inefficient. This research, however, did not stop at revisiting market efficiency alone. Whether the return series follows a long-memory process, has also been tested. Besides, non-parametric tests have also been conducted to confirm the results of the parametric tests and vice versa. It generated a more reliable estimate of market efficiency for the period under study. Results of the Autoregressive Fractionally Integrated Moving Average (ARFIMA) model confirm that the return series does not follow a long memory process, and any shock in the system will eventually vanish. The findings of other tests (the run test, the Augmented Dickey-Fuller (ADF) test, the Kwiatkowski–Phillips–Schmidt–Shin (KPSS) test, and the Kolmogorov-Smirnov (K-S) test) suggest that the return series of the DSE are time-series stationary, non-normal, and do not follow a random walk. Given these results, we must echo the prior researchers to conclude that the stock market of Bangladesh is not efficient for the period of 2015 to 2020. These findings add new knowledge to the existing knowledge pool about market efficiency and long memory of the stock market of Bangladesh.

Unparalleled Volatility in Sector-Wise Return in the Chittagong Stock Exchange: A Covid-19 Perspective

This study examined the effect of the Covid-19 health crisis on the volatility of sector-wise securities return listed in the Chittagong Stock Exchange (CSE) and compared this volatility with the pre-pandemic context. This study focused on the Chittagong Stock Exchange because this bourse offers a platform for negotiability and transferability of securities to investors in Chittagong and also plays a significant role in capital mobilization and the industrial development of Bangladesh. A sample of 90 securities under 19 sectors listed in the CSE were examined. The trend analysis indicated that Bank, Food, Footwear, Leasing, Life Insurance, Electrical and Engineering and Mutual Funds had same level of volatility between the Pre-Covid and Post-Covid time periods. Only four sectors, including Energy, Telecommunication, General Insurance and Miscellaneous sectors displayed a higher Post-Covid volatility relative to the Pre-Covid context. The result indicated that volatility of return was not the same for 19 sectors in the CSE over the selected time period. The researcher discovered that high and low periods of deaths had a significant impact on weekly volatility of return on 19 sectors of the CSE. However, the difference in volatility of return across all sectors between the Pre-Covid and Post-Covid time periods were not statistically significant from each other. Keywords: volatility of return, stock market, covid-19

Analysis of Total Factor Productivity of Power and Energy Sector in Bangladesh: A Study on CSE Listed Companies

Data envelopment analysis (DEA) is one of the most prominent productivity analysis model which measures overall performance of a firm based on specified input and output factors considering time series data. Power and energy sector of Bangladesh are controlled by both state owned and institutional ownership. The aim of the study is to assess Productivity performance of privately owned power and energy sector of Bangladesh by considering salaries and operating expenditure as input factors and revenue profit and total asset are output factors of eleven companies listed under Chittagong Stock Exchange (CSE) of Bangladesh. Malmquist output oriented productivity analysis was used to examine six years’ time series data, finds that total factor productivity of power and energy sector under private ownership is increased by 2.5% indicating firms overall efficiency is increased within sample period of time. The limitation of study is that long term time series data and state owned Organization are not considered in this study. Further research may be carried out considering both state owned and privatized institutions as well as more input-output variables may be used to examine the effectiveness of this sector on the whole economy.

The impact of ceo's personal characteristics on corporate social responsibility: evidence from Bangladesh

Purpose: Advanced CSR research is still in the context of developed countries. Very limited research is available in the CSR system of developing countries such as Bangladesh. Specifically, this paper examines the impact of CEOs personal characteristics on CSR among the public listed company in Bangladesh.Theoretical Framework: This study also focuses on six firm characteristics firm size, profitability board size, firm leverage, sales and cash.Design/Methodology/Approach: Using ordinary least square (OLS) regression analysis on 100 public listed firms at Dhaka stock exchange (DSE) and Chittagong stock exchange (CSE) in Bangladesh.Originality/Value: this study provides new evidence on the relationship between CEO Characteristics and corporate social responsibility in Bangladesh.Findings: The results show that CEO's impressive positive and rationally significant, which means male is better than women, corporate strategy is better than women in their strategy. One of the most important reasons for education because education also results CEO business education positive and significant, which ultimately affects the organization. The Chief Executive Officer of the organization is an important part of religion and its religion, so that the religion of CEO is Islam and Christian, then he will have more impact on the social welfare organization. The variability of CEO's religion (Islam and Christian) is positive, which affects the company's social welfare, which ultimately increases the company's value.

The Analysis of Operating and Financial Performance of Listed Companies after Issuing IPOs in Chittagong Stock Exchange

This paper investigates the financial and operating performance of 70 IPOs firms from 2011 to 2015. We examine changes in the Bangladeshi listed firms’ performance around their initial public offerings. It is found that Bangladeshi IPOs exhibit a sharp decline in the post-IPO performance compared to the pre-IPO period as measured by the ROA. We also find that the performance deterioration is significantly associated with the IPO event. The performance decline is associated with the firm transition from private into public ownership due to increasing agency costs. Also, we find evidence supports the lack of opportunity theory because the firm’s growth in sales and capital expenditure is much stronger in the pre-IPO period compared to post-IPO period.

Measuring Firms Intrinsic Values in an Emerging Economy: Evidence from Bangladesh

This study considered three parameters to measure firms’ intrinsic values: corporate governance, paid-up capital size, and dividend payout policy. These were used as independent variables, and market interest rate was used as the control variable. To measure these parameters, daily trade data was observed from both the Dhaka Stock Exchange (DSE) and the Chittagong Stock Exchange (CSE) data repositories and covered a total of 1475 firm years’ disclosures from 2013 to 2017 to conclude the analysis. The study revealed that there is a significantly negative correlation with firms’ intrinsic values and corporate governance due to the majority of firms failing to adhere to corporate governance guidelines and therefore generate higher intrinsic values. Also, firms in emerging economies are characterized by a high level of family ownership and lack of transparency. Similarly, there is a significant negative relationship with firms’ intrinsic values and higher capital-based firms, and there is no significant relationship with the firms’ intrinsic values and dividend payout policies in the emerging economy.

ARIMA Time Series Analysis in Forecasting Daily Stock Price of Chittagong Stock Exchange (CSE)

ARIMA Time Series Analysis in Forecasting Daily Stock Price of Chittagong Stock Exchange (CSE)

Impact of Covid-19 in Bangladesh Stock Market

The world's big economies are roiled and going under a devastating threat amid the impact of the COVID-19 pandemic. No country will be safe as this virus will eventually outbreak everywhere, regardless of how countries prepare to avoid it. The economic ramification as well as the stock market crisis will be uncertain due to the extended suspension of economic activities in almost every country. No wonder, the clattered stock markets of Bangladesh which have already got the adjective of “the worst stock market in the world” because of inefficient and irrational fluctuations in previous years will experience a colossal crisis due to the pandemic. The article provides an investigation on comparable analysis of the impact on stock markets of Bangladesh, Dhaka stock exchange, and Chittagong stock exchange, before and after the pandemic situation with current market data. We also examine the potential consequence of policy interventions to the market and the investors during a pandemic.

Do the Banks Comply to GRI guidelines for Sustainable Reporting Practices? Empirical Evidence from Bangladesh

This paper explores the degree and nature of sustainability reporting practices of listed banks in Bangladesh in compliance with the Global Reporting Initiative (GRI) guidelines. Data are gathered from annual reports through content analysis of 29 banks listed in the Dhaka Stock Exchange (DSE) and Chittagong Stock Exchange (CSE) for the period between 2011 and 2018. Stakeholder and legitimacy theory is the theoretical perspective underlying the study. The findings of the study revealed that 0% in 2011 and 17.14% in 2018 disclosed sustainability reports in line with GRI. On the other hand, the disclosure of sustainability information trend has increased from 32% in 2011 to 59% in 2018 considering 22 categories of information where most of the banks disclosed the highest information relating to green banking (C7) least information relating to public policy (C19). The major limitations of the study are the size of the sample, only secondary sources of data, and descriptive. This study only involved 29 listed banks in DSE and CSE. The policymakers (Bangladesh Bank, Ministry of finance, commerce, law, and environment), management of the respective organization, the NGOs, and professional accounting bodies can progress to enact and amend corporate laws for effective sustainable reporting design for the public and private entities. This research recognizes the gap of sustainable reporting practices to implement the vision of 5'ps (people, prosperity, partnership, peace, and the planet) according to UN Sustainable Development Goals (SDGs) 2030.

A Quantitative Approach to Evaluate the Financial Performance of Growth Oriented Bangladeshi Close-end Mutual Funds: An Empirical Study

Mutual fund, an investment vehicle by retail investors,is playing a vital role in our capital market by transforming the sum of the invested funds of investors into investing in a diversified portfolio by the professional investment managers.Since 1980, the mutual funds have been emerging rapidly in the stock market of Bangladesh. This research work attempts to evaluate the financial performance of growth-oriented Bangladeshi Close-end mutual funds traded in Chittagong Stock Exchange (CSE). In order to fulfill the objectives of the paper, ten mutual funds out of thirty-six have chosen. The Prime data used is the Net Asset Value (NAV) of the selected mutual funds and the returns of the CS 30 as a benchmark index. This paper concentrates on the evaluation of mutual funds by employing various research methodologies such as Treynor’s ratio, Sharpe ratio,and Jensen’s alpha and Regression Analysis. Finally, an attempt has also undertaken to assess the statistical relationship between the performance CS 30 and the mutual funds.