Stock Market Development & Economic Growth in Bangladesh

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1. Introduction
Capital markets are the promoter of economic expansion of a country engaged in exchange of capital instruments, like securities, bonds, treasury bills, notes etc to achieve economic goals. In Bangladesh, there are 2 stock exchanges. Dhaka Stock Exchange (Generally known as DSE) is the main stock exchange of Bangladesh. 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 BDT. 4 billion. The total number of listed companies is now 297. 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 by-laws along with the Securities and Exchange Ordinance 1969, Companies Act 1994 & Securities & Exchange Commission Act 1993. The major functions of DSE are listing of Companies, providing the screen based automated trading of listed Securities, settlement of trading, gifting of share or granting approval to the transaction or transfer of share outside the trading system of the exchange, market administration & control, market surveillance, publication of monthly review, monitoring the activities of listed companies, Investors Grievance Cell, Investors Protection Fund, announcement of price sensitive or other information about listed companies through online. Ensured that no sponsor or director shares of 'Z' category companies, excluding bank, insurance and financial institutions, are transacted on the stock exchanges or transferred outside the stock exchanges in any other form until further order with a view to facilitating the interest of investors and securities market. On the other side, Chittagong Stock Exchange (CSE) began its journey in 10th October of 1995 from Chittagong City through the cry-out trading system with the promise to create a state-of-the art bourse in the country. Founder members of the proposed Chittagong Stock Exchange approached the Bangladesh Government in January 1995 and obtained the permission of the Securities and Exchange Commission on February 12, 1995 for establishing the country's second stock exchange. The Exchange comprised of twelve Board members. The objectives of CSE are to develop a strong platform for entrepreneurs raising capital, to provide a fully automated trading system with most modern amenities to ensure quick, easy, accurate transactions and easily accessible to all, to undertake any business relating to the Stock Exchange, such as a clearing house, securities depository center or similar activities, to develop a professional service culture through mandatory corporate membership, provide an investment opportunity for small and large investors, attract non-resident Bangladeshis to invest in Bangladesh stock market, collect preserve and disseminate data and information on stock exchange, develop a research cell for analyzing status of the market and economy. Now, let’s just take a look backward. Realizing the importance of stock market on economic growth, prudential authorities such as World Bank, IMF and ADB undertook the stock market development programs for emerging markets in developing countries during 80s and 90s and the emerging stock markets have experienced considerable development since the early 1990s. The market capitalization of emerging market countries has more than doubled over the past decade growing from less than $2 trillion in 1995 to about $5 trillion in 2005 (Yartey, 2008). In October 2007, the global equity, i.e., the Market Capitalization (MCAP) of all companies in world stock markets, stood at $62.5 trillion, very close to that year's world Gross Domestic Product (GDP) figure of $65 trillion. Then the American sub-prime crisis hit the shores, banks collapsed and financial institutions went belly-up. A jaw-dropping $37 trillion of...
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