...International Journal of Business and Management Vol. 6, No. 7; July 2011 86 ISSN 1833-3850 E-ISSN 1833-8119 Capital Market of Bangladesh: Volatility in the Dhaka Stock Exchange (DSE) and Role of Regulators Md. Tariqur Rahman (Corresponding author) Senior Research Associate, Centre for Policy Dialogue (CPD) House No. 40/C, Road No, 11 (New) Dhanmondi R/A, Dhaka-1209, Bangladesh Tel: 880-2-812-4770, 9141734 Ext-146 E-mail: rahmantariqdu@gmail.com Khondker Golam Moazzem Senior Research Fellow, Centre for Policy Dialogue (CPD) House No. 40/C, Road No, 11 (New) Dhanmondi R/A, Dhaka-1209, Bangladesh Tel: 880-2-812-4770, 9141734 Ext-147 E-mail: moazzem@cpd.org.bd Received: December 17, 2010 Accepted: February 27, 2011 doi:10.5539/ijbm.v6n7p86 Abstract Over the last few years, the capital market of Bangladesh has witnessed a haughty growth which is not in line of development in the real sector of the economy. Although, the Securities and Exchange Commission (SEC) of Bangladesh has tried to correct the irregular behavior observed in the market, very often it is argued that lack of proper and firm decisions from the regulator’s side has contributed to make the market more unstable rather than to reduce it. The paper attempts to identify the casual relationship between the observed volatility in the country’s major bourses namely the Dhaka Stock Exchange (DSE) and the regulatory decisions taken by the SEC empirically. Using Vector Auto-regressive (VAR), statistically highly significant...
Words: 5574 - Pages: 23
...financial supervision and monitored by participating banks. Thus, organized capital markets are able to guarantee sound investment opportunities. This paper reveals the various aspects of the Capital Market in Bangladesh. 1.1 Objectives Capital market, being an essential element of today’s economy, demands an intensive and special attention. The objective of this study is to look into every aspect of Bangladesh capital market and identify its various pros and cons along with some recommendations to overcome the existing problems. The specific objectives of this study are: To give an overall idea about the capital market-its structures, functions, importance, etc. To identify the current situations of our capital market of Bangladesh. To compare the relative conditions of Bangladesh capital market to other countries of the world. To sort out the problems associated with our capital market. To suggest some practicable solutions to these problems. - Page | 1 - 1 Ch[pt_r 1 Secondary data and information were used in preparing this seminar paper, and these were collected through teamwork by adopting the following processes: ■ Visiting in person, the following organizations and respective key personnel: Dhaka Stock Exchange (DSE) Dhaka Chamber of Commerce (DCC) Bangladesh Bank (BB) Monetary Policy Department (MPD), BB ■...
Words: 10549 - Pages: 43
...Stock market crash of Bangladesh in 2010-11: Reasons & roles of regulators Sangit Saha Degree Thesis Förnamn Efternamn International Business 2012 DEGREE THESIS Arcada Degree Programme: International Business Identification number: Author: Title: 11497 Sangit Saha Stock market crash of Bangladesh in 2010-11: Reasons & roles of regulators Andreas Stenius Supervisor (Arcada): Commissioned by: Abstract: The aim of the thesis is to determine reasons of the stock market crash in Bangladesh in 2010-11 and roles of the regulators and government since the crash took place. The theoretical background of the study includes brief introduction of Bangladesh stock market with its structure and different regulatory and intermediary organizations. It also describes one international stock market crash and stock market crash of Bangladesh in 1996. For the theoretical part investigation report of Khondkar Ibrahim Khaled is used as the main secondary resource. The report helps to get background of the crash with reasons and role of different regulatory and intermediary organizations. Self-administered questionnaire is used to obtain primary data for the study. The author sent 25 questionnaires to employees of broker houses and general investors but 18 replied. The result of the Self-administered questionnaire helped author to find some other reason behind the stock market crash in addition with reasons provided in the investigation report. Moreover...
Words: 15094 - Pages: 61
...Exchange is the first Stock Exchange in Bangladesh. It was established by the East Pakistan in 1954.It is located at Motijeel in Dhaka. Now Bangladesh has two stock exchanges one is DSE that is Dhaka stock exchange and another is CSE that is Chittagung stock exchange.DSE and CSE is playing a vital role in stock exchange business. It has been putting a great contribution in national economy of the country. The educated people of the country is investing their money in the stock exchange market rather than saving in the banking institutions. So people of the country are getting a smooth benefit from share market. Because of that they are investing their money in the stock exchange market. From this report we got that most of the people knows something about the share market and they are doing this business earnestly. 1.INTRODUCTION Dhaka Stock Exchange (Generally known as DSE) is the main stock exchange of Bangladesh. It is located in Motijheel at the heart of the Dhaka city. It was incorporated in 1954. Dhaka stock exchange is the first stock exchange of the country. A 24 members council is managed and operated the function of DSE. Among 24 members, 12 are chosen DSE members and the remaining 12 are chosen from the following position: Bangladesh Bank Commerce Ministry Finance Ministry Law Ministry Industries ministry President of Institute of Chartered Accounts of Bangladesh President of Supreme Court Bar...
Words: 2551 - Pages: 11
...Report On Capital Market in Bangladesh ECO-101: Principle of Microeconomics Section No: 14 Prepared For: Kazi Abul Bashar Adjunct Faculty East West University Department of Economics Prepared By: A.F.M.Ahsan Ullah Id No: 2007-1-10-015 Department of Business Administration Date of Submission: April 20, 2011 EAST WEST UNIVERSITY 1.0 Introduction: The Dhaka Stock Exchange (DSE) is registered as a Public Limited Company and its activities are regulated by its Articles of Association rules & regulations and bye-laws along with the Securities and Exchange Ordinance, 1969, Companies Act 1994 & Securities & Exchange Commission Act, 1993. 1.1 Background of Dhaka Stock Exchange: • • • • East Pakistan Stock Exchange Ltd was finally named as Dhaka Stock Exchange (DSE) on 14 May 1964. Although incorporated in 1954, formal trading started in 1956. Prior to independence in 1971, the number of listed companies in DSE was 196 with a total paid up capital of Tk. 4 billion. The total number of listed securities is now 378. 1.2 Role of Capital Market: The primary role of the capital market is to raise long-term funds for governments, banks, and corporations while providing a platform for the trading of securities. This fund rising is regulated by the performance of the stock and bond markets within the capital market. 1.3 Policies of Dhaka Stock Exchange (DSE): • • • DSE can introduce automate monitoring systems that may control price manipulation, malpractices...
Words: 5235 - Pages: 21
...(July 2012) www.setscholars.org/index.php/ijarbae Full Length Opinion Paper IJAR-BAE ISSN: 1839-8456 Vol. 01. Issue 03. Article No. 05 International Journal of Applied Research in BUSINESS ADMINISTRATION & ECONOMICS Identifying the Critical Issues of Stock Market: A Study on Dhaka Stock Exchange (DSE) Md. Moniruzzaman Sarker1*, Nusrat Nargis2* 1 2 Senior Lecturer, School of 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...
Words: 4574 - Pages: 19
...[pic] PREMIER UNIVERSITY CHITTAGONG TOPIC: STOCK MARKET SITUATION AND MARKET CRASH OF BANGLADESH STOCK MARKET, 2011 PREPARED TO: TANBINA TABASSUM LECTURER, FACULTY OF BUSINESS STUDIES, PREMIER UNIVERSITY CHITTAGONG. PREPARED BY: THE DOERS SEM: 8TH, SEC: A, DEPT.: FINANCE PROGRAM: BBA, SESSION: JULY ’11 DATE OF SUBMISSION: 19 DECEMBER, 2011 GROUP NAME: THE DOERS |SL. |STUDENT NAME |ID | |1 |TRISHAN CHOWDHURY |0714111851 | |2 |NISHAT FATEMA KHANAM |0714111864 | |3 |UMME KULSUM |0714111866 | |4 |ANUPAM GUPTA |0714111848 | |5 |PARTHA SARATHI ROY CHOWDHURY |0714111859 | |6...
Words: 3052 - Pages: 13
...Introduction: The stock market of Bangladesh is considered to be one of the emerging markets in the context of the global financial system. The market has immense potentials for country’s industrialization, development of infrastructure in particular and economic growth in general. The government and the Securities and Exchange Commission (SEC) have undertaken a good number of initiatives to meet Bangladesh's development financing requirements with a particular focus on developing long term infrastructure financing and strengthening financial stability through promotion of capital market. In this regard formulation of a Master Plan is of crucial importance. Stock markets or Stock exchanges play an important role in the modern capitalized economy by providing the strength to nation's economic infrastructure. Now the stock market is one of the most important sources for companies to raise capital. Stock market allows businesses to raise additional capital for expansion by transferring the ownership of the company. It provides individuals the opportunity to invest in corporations. The size of the world stock market was estimated at about $36.6 trillion at the beginning of October 2008. In Bangladesh, there are two stock exchanges, the Dhaka Stock Exchange (DSE) and the Chittagong Stock Exchange (CSE), DSE was setup on April 28, 1954 that started formal trading in 1956. In 1995, CSE was setup. However, in its fifty-eight year’s history the stock market of Bangladesh crashed two times, first...
Words: 9305 - Pages: 38
...Capital market is a market for securities, where business enterprises and governments can raise long-term funds. It is defined as a market in which money is provided for periods longer than a year, as the raising of short-term funds takes place on other markets. Bangladesh capital market is one of the smallest in Asia but the third largest in the south Asia region. It has two full-fledged automated stock exchanges namely Dhaka Stock Exchange (DSE) and Chittagong Stock Exchange (CSE) and an over-the counter exchange operated by CSE. Dhaka Stock Exchange (DSE): Dhaka Stock Exchange (DSE) was first incorporated as East Pakistan Stock Exchange Association Ltd in 28 April 1954 and started formal trading in 1956. It was renamed as East Pakistan Stock Exchange Ltd in 23 June 1962. Again renamed it’s as Dacca Stock Exchange Ltd in 13 May 1964. After the liberation war in 1971 the trading was discontinued for five years. In 1976 trading restarted in Bangladesh, on 16 September 1986 DSE was started. The formula for calculating DSE all share price index was changed according to IFC on 1 November 1993. The automated trading was initiated in 10 August 1998 and started on 1 January 2001. A Central Securities Depository System was initiated in 24 January 2004. Chittagong Stock Exchange (CSE): Chittagong Stock Exchange (CSE) the second stock exchange of the country was established on 12 February, 1995. Being a modern stock exchange, after its setting up in Agra bad commercial area of the...
Words: 1147 - Pages: 5
...1 Introduction: Bangladesh capital market is one of the smallest in Asia but the third largest in the south Asia region. It has two full-fledged automated stock exchanges namely Dhaka Stock Exchange (DSE) and Chittagong Stock Exchange (CSE) and an over-the counter exchange operated by CSE. It also consists of a dedicated regulator, the Securities and Exchange Commission (SEC),since, it implements rules and regulations, monitors their implications to operate and develop the capital market. It consists of Central Depository Bangladesh Limited (CDBL), the only Central Depository in Bangladesh that provides facilities for the settlement of transactions of dematerialized securities in CSE and DSE. 2.1 Functions of capital market: The functioning of an efficient capital market may ensure smooth floatation of funds from the savers to the investors. When banking system cannot meet up the total need for funds to the market economy, capital market stands up to supplement. To put it in a single sentence, we can therefore say that the increased need for funds in the business sector has created an immense need for an effective and efficient capital market. It facilitates an efficient transfer of resources from savers to investors and becomes conduits for channeling investment funds from investors to borrowers. T 2.2 Product of capital market: • Shares, • Debentures, • Mutual funds, • Bonds, • Derivatives, • Future and options. 2.3 Player...
Words: 4025 - Pages: 17
...Monetary Policy and Capital Market Development in Bangladesh Policy Note: PN 0708 Shubhasish Barua* and Md. Habibour Rahman* Abstract Bangladesh Bank (BB) adjusted its monetary policy stance during 2005 in order to contain inflationary pressures and facilitate stability in the foreign exchange market. At the end of 2005, interest rates on NSD certificates were also adjusted upward. The latter development, however, raised some concern among different economic agents regarding its possible impact on the country's capital market. In this paper we attempt to closely inspect the evolvement of monetary policy and capital market indicators in recent years and their possible interrelationship to shed some light on the issue. Since prices of stocks are mainly determined by company fundamentals, monetary policy can have only short term effect on stock prices. Even in the short run, effect of interest rates on stock prices is less clear-cut, and in a less developed capital market like Bangladesh, stock prices do tend to respond, for short term, to new reform measures and government incentives. 1. Introduction Bangladesh Bank (BB) adjusted its monetary policy stance during 2005 in order to contain inflationary pressures and facilitate stability in the foreign exchange market. At the end of 2005, interest rates on NSD certificates (government borrowing instruments from the non-bank public) were also adjusted upward. The latter development, however, raised some concern among different...
Words: 3361 - Pages: 14
...monitored by participating banks. Thus, organized capital markets are able to guarantee sound investment opportunities. This paper reveals the various aspects of the Capital Market in Bangladesh. 1.1 Objectives Capital market, being an essential element of today’s economy, demands an intensive and special attention. The objective of this study is to look into every aspect of Bangladesh capital market and identify its various pros and cons along with some recommendations to overcome the existing problems. The specific objectives of this study are: _ To give an overall idea about the capital market-its structures, functions, importance, etc. _ To identify the current situations of our capital market of Bangladesh. _ To compare the relative conditions of Bangladesh capital market to other countries of the world. _ To sort out the problems associated with our capital market. _ To suggest some practicable solutions to these problems. Methodology Secondary data and information were used in preparing this seminar paper, and these were collected through teamwork by adopting the following processes: ■ Visiting in person, the following organizations and respective key personnel: _ Dhaka Stock Exchange (DSE) _ Dhaka Chamber of Commerce (DCC) _ Bangladesh Bank (BB) _ Monetary...
Words: 7078 - Pages: 29
...Course No. F 618 Course Title: Financial Markets and Institutions Assignment on “Reasons for Share Market Debacle in 1996 & 2010 and Recommendations for Improvement” Submitted to Dr. Jamal Uddin Ahmed Professor Department of Finance University of Dhaka Submitted by Tahasin Monabil Haq ID No. 21005 Table of contents Topics | Page | Acknowledgement | 3 | What is Stock Exchange? , Features of Stock Exchange | 4-5 | Stock Market in Bangladesh, Securities and Exchange Commission | 5-6 | Dhaka Stock Exchange (DSE)& Chittagong Stock Exchange (CSE) | 5-6 | Structure of Bangladesh Stock Market & Settlement | 6-7 | Stock market crash in 1996 | 7-8 | Reasons Behind the Stock market crash in 1996 | 8-9 | Stock market crash in 2010 | 09-12 | Reasons behind share market crash (2010) | 12-15 | Suggestions to improve the activities of Stock Market | 16-17 | Conclusion | 17 | References | 18 | | ACKNOWLEDGEMENT First of all I want to pay my gratitude to the Almighty Allah for helping me in preparing this paper successfully. Secondly, I want to express my gratefulness to our respective faculty, Dr. Jamal Uddin Ahmed, for providing us continuous support and guidelines to prepare a collaborative formal paper. His contribution to us can only be acknowledged but never be compensated. Furthermore, i want to convey my heartiest thanks to my friends and classmates especially who...
Words: 4895 - Pages: 20
...Securities and Exchange Commission Bangladesh CHAIRMAN’S STATEMENT The Securities and Exchange Commission (SEC) was established on June 8, 1993 under the Securities and Exchange Commission Act 1993 (Act 15 of 1993) as a capital market regulator with a view to ensuring proper issuance of securities, protection of the interest of investors in securities, development of the capital and securities markets, and regulation of the capital and securities markets in Bangladesh. The Commission consists of a chairman and four full time members who are employed by the government for a period of three years renewable for another similar term. The services of the chairman and members of the Commission are also determined by the government. The Chairman is the chief executive officer of the Commission. The country’s capital market witnessed a remarkable turn-around during the fiscal year 2008-2009. There were unmistakable signs of the resurgence of investor’s confidence which suffered a major jolt in the wake of the catastrophic crash of the stock market in 1996. Dhaka Stock Exchange’s (DSE) general index which was introduced on 27th November 2001 with a base of 818 points hardly moved in the following two years with the index increasing by merely five points to reach 823 on 30th June 2003. A significantly higher level was attained during the following year with the index rising to 1319 as of 30 June 2004. Parallely, Chittagong Stock Exchange’s index rose from 1841 as of 30th June 2003 to...
Words: 13460 - Pages: 54
...Internship Report On Effectiveness of DSE Monitoring System SUBMITTED TO: Md. Rafiqul Islam Professor Department of Business Administration Faculty of Business & Economics Daffodil International University SUBMITTED BY: Md. Nasir Uddin ID: 072-11-2038 BBA Department of Business Administration Faculty of Business & Economics Daffodil International University Daffodil International University September 10, 2011 Internship Report On Effectiveness of DSE Monitoring System Date of Submission: 10 September, 2011 4/2, Sobhanbagh, Prince Plaza, Mirpur Road Dhanmondi, Dhaka-1207, Bangladesh LETTER OF TRANSMITTAL August 10, 2011 Md. Rafiqul Islam Professor Internship Supervisor Department of business administration Daffodil International University Subject: Submission of internship report. Dear Sir, This is my pleasure to present my internship report entitled “Effectiveness of DSE Monitoring System” Which was prepared from my experience in Dhaka Stock Exchange. With your kind supervision I believe that the knowledge and experience gathered...
Words: 16787 - Pages: 68
