...Introduction Global financial crisis started when sub prime mortgage market of United States collapsed. Since the global financial crisis took place, many developed and developing countries have been going through recession. It was believed that ongoing global financial crisis will not affect Bangladesh economy as badly as it can to other developed economy because economy of Bangladesh is not so dependent on international capital or foreign investment. But, still there are and will be some shocks of ongoing global financial crisis available for Bangladesh economy. So, Bangladesh economy will be affected by global financial crisis. Global financial crisis might reduce overseas job opportunities and export earnings. Global financial crisis may turn into a recession. Economy of developing countries including Bangladesh is already going through recession. Bangladesh is a low income country. If global financial crisis continuous then economy of Bangladesh will be suffering. Negative impacts of global financial crisis are beginning to show on the increasingly globalizing economy of Bangladesh. Export growth rate of Bangladesh has turned negative. Export of non-apparels items is being reduced. Depreciation of currencies by competing countries caused erosion of Bangladesh’s competitive strength in the global market. Remittance earnings could be badly affected in near future because number of job seekers going abroad halved as some countries either revoked or have stopped issuing...
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...Global Financial Crisis: Likely Impact on Bangladesh [Abstract: The current financial crisis that originated in the United States and quickly spread to Europe and Asia could be a global crisis soon. Reckless lending by banks and financial institutions and slack regulatory system were at the root of the crisis, which is perhaps the gravest since the Great Depression of the 1930s. Amid a severe credit crunch, the rich economies have entered into a deep recession. IMF economists predict the global economic growth to fall from 5.6% in 2007 to 3.9% in 2008, and to 3.0% next year. Billions of dollars pumped by the rich and the emerging economies to bail out the distressed banks or to boost their economies have failed to stop the rot. Bangladesh is apparently immune from the crisis, its economy not being very tightly linked with the rest of the world. It has been enjoying a relatively healthy growth of exports, industrial activity and remittances. Yet, a prolonged recession in the rich countries may cause a slowdown in exports, inflows of remittances, foreign aid and FDI, thereby hurting GDP growth. IMF has said that GDP growth in Bangladesh this year will be lower – 5.5% instead of the officially projected 6.5%, if the global recession lingers. Bangladesh policy makers will need to stay alert to the possibility of the economy being hit by the global slump and adopt appropriate mitigating measures.] Introduction The United States economy is now experiencing a severe credit...
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...turning to Bangladesh to make clothes, not least because China is the global leader in clothing manufacturing and exports. But the shift is happening for very obvious reasons.” BBC new 29/08/2012. Using the theory of comparative advantage, discuss the possible reasons why this shift is being observed. Globalisation from the facts of Economics ‘is considered by a rise across borders in the flow of goods, services and financial resources alongside with a rise in international movement of technology material and characters’ Boyes & Melvin (2011). As it was announced on BBC News (2012) about how Chinese companies are moving to Bangladesh to make clothes even though China is a worldwide leader in the manufacturing businesses. Absolute advantage involves the specialism of trade benefit among countries, well as according to the law Comparative advantage is that ‘when one Country has fewer efficiency then it has absolute disadvantage with detail to the further Countries production of both merchandises, there is still a source for commonly useful trade’ Simatele (2013). Heckscher- Ohlin (H-O) theory is founded on two theories, the H-O theorem and the factor price Equalisation theorem. The following essay will outline the trade established on Absolute advantage, H-O Theorem, the theory of Comparative advantage and the way the theory opportunity cost can be used to explain Comparative advantage then examples will be given to illustrate the movement of Chinese firms to Bangladesh to make...
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...accumulation of foreign exchange reserves in recent months, there has been a growing interest in Bangladesh on the alternative uses of its reserves. However, different reserves adequacy measures based on global best practices confirm that its reserves holding is not markedly higher than what is required. The country’s reserves stand higher than the adequate level only when one considers the current account aspects of reserves benchmark which is perhaps appropriate for the country as its financial system is still autarkic. The dynamics in its balance of payments account also supports the fact. The paper highlights the fact that Bangladesh’s reserves build-up is the result of an ‘investment drought’ in the country. This is partly due to its underdeveloped financial systems, and partly due to other structural problems in the economy – entailing difficulties in properly channelling national savings to investments. As the Bangladesh central bank’s sterilised intervention increases, so will its cost of reserves accumulation. The reason is the interest rate arbitrage between Bangladesh and the United States. The United States government securities market, that absorbs the lion’s share of developing economies reserves, has been offering lower yields following the collapse in interest rate in the country in recent times. Nevertheless, the apparent spread between the United States Treasury and Bangladesh Treasury rates might be not that high in real terms if one weighs in Bangladesh’s certain...
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...The Global Financial Crisis: Impact on Bangladesh A.K.M. Atiqur Rahman Professor Department of Economics North South University Overview I. Introduction: Genesis and Spread of the Crisis. II. Global Recession and LDCs III. Impact on Bangladesh IV. Recession and Export from Bangladesh V. Exchange Rate Movement VI. Remittance VII. Import and Tax Revenue VIII. Overall Impact IX. Policy Implications I. Introduction: Genesis and Spread of the Crisis. • Root: Mispricing in the Massive Credit Default Swap Market • Sub prime Mortgage: Bank transferred credit risk to third party through the process of securitization ( MDS, CDO) • Reckless growth of sub prime mortgage-lower yield in risky mortgage • Arbitrage drove the yields on all bonds & loans down • Expansion of consumer credit, housing price bubble Intriduction continued • Unsustainability of Credit default swap and subprime mortgages exposed • Housing bubble burst → mortgage default → foreclosures→ bank and insurance failure→ credit freeze • Spillover of financial crisis to real economy through virulent credit crunch →depressed aggregate demand • Sub prime mortgage default led to spillover effects around the world (Europe and emerging economies) via an elaborate network of derivatives Continued . Global consequence of the crisis includes: • Sharp rise in Unemployment in the US, Job loss in few other countries • Sharp fall in the stock market price around the globe, current...
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... THE GLOBAL FINANCIAL CRISIS: IMPACT ON BANGLADESH K.A.S. Murshid BROTEE July 19, 2009 The author would like to gratefully acknowledge the contribution of Dr. Anwara Begum, Research Fellow, BIDS and Mr. Zabid Iqbal, Research Associate, BIDS. The author is a Research Director, BIDS. EXECUTIVE SUMMARY (TBC) I Introduction The world economy is currently experiencing the worst global financial crisis since the Great Depression. While major world economies have taken a massive hit resulting in negative growth rates in key countries or regions, including the US, EU and Japan, the contagion also spread to emerging developing countries like China, Brazil, India and South Africa, as well as to the countries of South East Asia and Latin America. The magnitude of impact seems to depend on the extent of integration with the rest of the world (or to use World Bank jargon, the extent of liberalization that has taken place). The impact on LDCs like Bangladesh has been muted in the first, and even the second round. However, there is growing evidence that third round impacts are making themselves felt, manifested in declining exports, declining migration of labour, growing number of sick industries, industrial unrest, and reduced growth. There are also fears that poverty and unemployment may be exacerbated and MDG targets could become jeopardized. Countries like Bangladesh are interested...
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...Bangladesh is the ninth largest country in the world by population (164.4 million people) and is one of the most densely populated. Almost half of its 164.4 million people live on less than US$1.25 a day (World Bank, 2005) and 80% on less than US$2.00 a day (DFID, 2011). The size and density of the population, together with regular extreme weather events, such as floods and cyclones, make the country extremely vulnerable to natural hazards becoming natural disasters. During the last ten years, 12 major natural disasters have impacted upon millions of people in Bangladesh, including floods in 2004, which affected 36 million people, and Cyclone Sidr in 2007, which affected over nine million people. Since 2000, US$430 million has been raised for disaster response with over half of it allocated to the humanitarian operation following Cyclone Sidr. Aside from a history of natural disasters, an estimated 300,000 refugees of the Muslim minority Rohinga ethnic group have fled from neighbouring Myanmar since being stripped of their citizenship in 1982, and are now resident in Bangladesh. Tens of thousands live in official and informal refugee settlements, while a far larger number live as ‘illegal economic migrants’ throughout Bangladesh. The Rohinga refugee crisis is often considered a ‘forgotten’ crisis. The frequency of disasters has prompted a strong domestic capacity working to prevent...
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...fear cultural and social assimilation as they believe this would have a negative impact on the existing culture of their society. Globalization therefore has mostly narrowed down to economic integration and this mainly happens through three channels; flow of finance, trade of goods and services and capital movement. Globalization is a term that includes a wide range of social and economic variations. It encompasses topics like the cultural changes, economics, finance trends, and global market expansion. There are positive and negative effects of globalization - it all comes as a package. Globalization helps in creating new markets and wealth, at the same time it is responsible for extensive suffering, disorder, and unrest. The great financial crisis that just happened is the biggest example of how negative globalization can turn. It clearly reveals the dangers of an unstable, deregulated, global economy. At the same time, this gave rise to important global initiatives, striving towards betterment. Globalization is a factor responsible for both repression and the social boom. What happens when there is a growing integration of economies across the globe? Majorly there have been positive impacts of this global phenomenon - through liberalization, privatization and globalization (LPG). Due to globalization, there has been significant flow of inward foreign direct investment. MNC companies are getting a chance to explore various different markets across economies and explore the...
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...Introduction A liquidity crisis may be created in the banking sector due to its over-reliance on domestic borrowing for implementing the annual development programme. If the government borrows hugely for implementing the ADP, the industrial sector will not get enough loans from the banking system, which will ultimately lead to a higher bank interest rate. The government is planning to borrow from banks of Tk 18,957 crore for meeting the deficit and spending in different sectors. The growth of the industrial sector will be hampered if the government does not stop borrowing from banks. Due to government borrowing banking sector is facing a great amount of liquidity crisis in the recent years. Liquidity crisis results in various problems to the economy. it rises interest rate, hinders economic growth, decreases confidence of banking people. So, it is one of the major responsibilities of the Bangladesh Bank to make proper steps to control liquidity crisis. What is liquidity? Liquidity refers to how quickly and cheaply an asset can be converted into cash. Money in the form of cash is the most liquid asset. Assets that generally can only be sold after a long exhaustive search for a buyer are known as illiquid. High liquidity means there is a lot of capital because interest rates are low, and so capital is easily available. Interest rates are very important in controlling liquidity. What Does Liquidity Crisis Mean? Liquidity crisis indicates a negative financial situation characterized...
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...Preliminary Draft February 20, 2010 THE GLOBAL ECONOMIC CRISIS AND SOUTH ASIA By Dr. Akmal Hussain, Distinguished Professor, Beaconhouse National University INTRODUCTION What began as a financial crisis in 2008 rapidly metastasized into a global economic crisis that pushed the world economy into the deepest recession since the Great Depression of the 1930s. In this paper we will examine the origins and nature of this crisis in the context of the dynamics of world capitalism, indicate the policy challenges in the process of recovery and analyze its impact on South Asia. I. STRUCTURAL CHANGE AND FRAGILITY OF THE FINANCIAL SPHERE In the process of its growth the world economy has undergone a structural change in the post war period in terms of two important features: (i) The dominant form of the production unit of goods and services that emerged in the post war period was the large multinational corporation (MNC) in contrast to the large national corporation in the late 19th century and the small firm in the late 18th century.1 The MNCs were not only able to sell goods and services on a global scale but were able to achieve internationalization in their production processes, such that different components of a particular good could be manufactured in their facilities in different countries to take advantage of country specific resource 1 For a more detailed analysis of Growth and Structural Change in the Global Economy since the Industrial...
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...Business & Economics, United International University, Bangladesh. Senior Lecturer, Department of Business Administration, Daffodil International University, Bangladesh. *Corresponding author’s email: mrajib.sarker@gmail.com, mishu_fin@yahoo.com Article History Received: 19-05-2012 Accepted: 13-06-2012 Available online: 31-07-2012 ABSTRACT Bangladeshi Stock Market has experienced a big crash twice from its inception. In 1996, the market was crashed because of speculative bubble whereas; it was an asset bubble in the year 2011. The stock price was overvalued this time. Price was inflated about 500-700 percent compare to the face value. DGEN Index climbed at point 8918.51 on December 05, 2010 which signaled a steeper bubble. Our study postulates the present scenario of Bangladesh Stock Market through various quantitative and qualitative data which are extracted from the secondary sources. Quantitative data are gathered from the web site of Dhaka Stock Exchange and other qualitative data are collected from published research journals, newspapers, websites etc. This study has revealed that, Gap between the Demand and Supply of stock, extraordinary over pricing of stock, market manipulation, lack of knowledge about the stock market mechanism among the general investors, price distortion, inefficient regulations, political unrest, etc caused the crash of DGEN Index in the FY2011. Security and Exchange Commission (SEC) of Bangladesh and government should encourage more...
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...FIN 382 COMPANY ANALYSIS GROUP ASSIGNMENT PREPARED FOR : PUAN NORSALIZA BINTI ABU BAKAR PREPARED BY : KHAIRIL AZMAN BIN RADZALI 2010459076 DHARWIS BIN HASNIM 2010699142 MUHAMMAD FAIDI BIN SAFARRUDIN 2010408132 ELMIRUSHUDA BINTI AMERUDIN 2010248112 FAZLIAH NOOR BINTI MOHD FOUZI 2010834506 GROUP : JBM114 6A DUE DATE : 21st DECEMBER 2012 ECONOMY ANALYSIS 1.0 WORLD ECONOMY The world economy can be evaluated in various ways, depending on the model used, and this valuation can then be represented in various ways. It is inseparable from the geography and ecology of Earth, and is therefore somewhat of a misnomer, since, while definitions and representations of the "world economy" vary widely, they must at a minimum exclude any consideration of resources or value based outside of the Earth. For example, while attempts could be made to calculate the value of currently unexploited mining opportunities in unclaimed territory in Antarctica, the same opportunities on Mars would not be considered a part of the world economy – even if currently exploited in some way – and could be considered of latent value only in the same way as uncreated intellectual property, such as a previously unconceived invention. It is common to limit questions of the world economy exclusively to human economic activity, and the world economy is typically judged in monetary terms, even in cases in which there is no efficient market to help valuate certain goods or services,...
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...Course Name: Commercial Bank Management Course Code: FIN 425 Submission page - Submitted To – Fahim Muntaha Course instructor, school of business ASA University Bangladesh (ASAUB) - Submitted By – KAMRUL HASAN CHOWDHURY ID No: 081-12-0414 S.M.IBRAHIM ID No: 081-12-0396 ISHRAT NAHAR ESHA ID No: 081-12-0408 MD.MAHAMUD SULTAN ID No: 081-12-418 ROKSANAQ HUQ TABARI ID No: 081-12-424 Section: FIN-3C 3rd Batch, (Summer Semester, 2011) Date of Submission: 14th August, 2011 - Letter of Transmittal- Date: 14th August, 20011 To Fahim Muntaha Course instructor School of Business ASA University Bangladesh (ASAUB) Dear Sir, Here is a report that we have prepared for our, FIN-425: Commercial Bank Management. The topic of the report is the “Reserve and Liquidity Management of Islami Bank Bangladesh Ltd.”. It was an interesting & outstanding research for us & we learned a lot about the reserve and liquidity policy provided by IBBL. We would like to thank you for allowing us to work on this topic and for your constant guidance and support. We want to declare that, we took help from Internet website of the particular bank & advices from Cash Manager of IBBL. There might be fault in this report, please kindly consider us if there is any kind of mistake. I therefore, hope that you would kindly grant our report. Thanking you, Name | Signature | Kamrul hasan joy | | S .m. Ibrahim | | Mahamud sultan | | Eshrat nahar Esha | | ...
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...Assignment on Monetary Policy in Bangladesh INTRODUCTION: Monetary Policy the policy adopted by the central bank for control of the supply of money as an instrument for achieving the objectives of general economic policy .With the shifts of the policy stance of the government in various phases, necessary adjustments were made in the country's monetary policy. The Department of Research in the Bangladesh Bank plays an important role in the formulation of economic policies of the country. The principal function of the Department is to help the bank in the formulation of monetary and credit policies and also to assist it in discharging its duty as adviser to the Government on economic and financial matters. To this end, the department keeps the top executives of the bank fully informed of latest economic development both at home and abroad, in a regular and systematic manner. For this purpose the Department keeps a close watch on trends in the domestic economy as well as on international economic developments with particular reference to monetary, fiscal land trade problems and policies. Domestic and international economic developments are brought within the compass of comprehensive reports and reviews which are submitted for perusal of theGovernor, Deputy Governor, and Senior Executives of the bank, as also the bank’s Board of Directors. Definition of Monetary Policy: Monetary policy is the term used by economists to describe ways of managing the supply of money in an...
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...Bangladesh's stock market performance, measured in terms of the stock price index, has been one of the best globally for a number of years. Its upward surge defied global and regional market developments. When almost all markets across the globe collapsed during the global economic crisis, DGEN was perhaps one of the very few which defied the global trend and maintained its upward progression fueled by local developments/conditions. When it started its upward trend in 2007, the market was certainly undervalued, and there were fundamental economic reasons for it to go up. At that time the average Price/Earning (P/E) ratio was in single digit and the market capitalization was less than 10 per cent of gross domestic product (GDP). The sustained upward surge, however, went beyond what could be justified by economic fundamentals by early 2010. Since mid-2010, as the index crossed the 5000 mark, the market has clearly been driven by speculative forces. During the last two-month period leading up to the peak, the index increased by more than 2000 points before crossing the 8900 level on December 5. To put it in proper perspective, the index level was at about 1500 until this recent surge started in 2007. Daily market turnover increased 30 fold about Tk. 1.0 billion to Tk. 33 billion over the three-year period. Clearly, economic fundamentals cannot support this level of valuation gain and turnover, and the market is bound to correct itself once it runs out of steam. The recent...
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