Performance of Merchant Banking in Bangladesh

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1. Introduction

1.1 Origin

The preparation of this report is a requirement of the course on “Management of Financial Institutions”, M. Jahangir Alam Chowdhury, Professor of Finance Department at Faculty of Business Studies, University of Dhaka, who is also the course instructor has assigned us a topics regarding “Merchants Banks in Bangladesh” where industry performance and activities are analyzed by the listed merchants banker in our country.

1.2 Background

The Progress of any economy mainly depends on the efficient financial system of the country. This importance of the financial sector reforms affirms an effective means for solving the problems of economic, financial and social in the developing nations of the world. The progress of the securities Industry of any country depends mainly on the flow of funds. In fact, Capital generation is the lifeblood of the capital market without which the health and soundness of the financial system cannot be geared up and for which well-developed capital market as well as money market is essential. The merchant bankers are those financial intermediaries involved with the activity of transferring capital funds to those borrowers who are interested in borrowing. They guarantee the success of issues by underwriting them. Merchant Banks are popularly known as “issuing and accepting houses”. So, in this report we tried to find out the activities and industry performances by merchant banks in Bangladesh.

1.3 Objective of the Report

The main purpose of this study is to create a bridge between our theoretical knowledge & the practical scenario.

The specific objectives of the study are:

1. To gain an understanding about the Merchant Banking and its practices in Bangladesh. 2. To assess the role and contribution of Merchants Banker in Bangladesh. 3. To identify the major problems faced by Merchants Banker in Bangladesh. 4. To assess the future prospect of the Merchants Banker in Bangladesh.

1.4 Organization of the Report

The report consists of four parts. The parts that are included in these reports are following:

➢ An overview of whole economy in Bangladesh.
➢ An overview of whole financial sector of Bangladesh and its contribution to macro economy. ➢ An overview of merchant banking activities in Bangladesh. ➢ Analysis of the merchant banking activities and performance ➢ Problem and prospect of merchant banking in Bangladesh.

1.5 Methodology & Sources of Data

The information for the report was collected from secondary sources.

Secondary data have been collected from various sources as internet, listed companies annual report serving merchant banking activities, publications, Speeches in different seminars, previous researches etc. Our text books “Securities Related Ordinance, Act, Rules, and Regulation “also helped us in this regard. The data and information collected from secondary sources have been analyzed.

1.6 Limitation

The major limitations encountered are:

➢ The most elementary limitation of this study is to access to relevant information regarding merchant banking activities as the term has not been practiced widespread in our country.

➢ Lack of information disclosure by the listed companies serving merchant banking activities.

➢ Many merchant bankers are enlisted but their information is not publicly listed and due to information confidentiality the access of such information is really tough to catch.

2. An overview of whole economy in Bangladesh

In line with global economic trends, Bangladesh has experienced two volatile years (FY2008-09 andFY2009-10) when its economic growth was restrained below 6.0 percent level). The FY2008-09, was the year of global financial and economic crisis. In the face of fall in global demand commodity prices as well as domestic inflationary trend declined considerably. Incidentally, during this period, Bangladesh economy not only...
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