Term Paper

Topics: Bank, Central bank, Financial market Pages: 22 (6400 words) Published: April 30, 2013
Term Paper
Contribution of Financial Market in Our Economy
Submitted To:
Fatima Husain
Assistant Professor
Dept. of Finance & Banking
Govt. Titumir College, Dhaka

Submitted By:
Proshanta Kumar Saha
B.B.A. (Honors)
Dept. of Finance & Banking
Roll: 9578488
Date of submission: January 2013

I confirm that the information that I have provided in this declaration form is correct and complete. I understand and accept that if I knowingly withhold information, or provide false or misleading information, this may result in my project being rejected, or provide appointed, in my dismissal, and I may be liable to prosecution. Proshanta Kumar Saha

B.B.A (Honors)
Roll: 9578488
Dept. of Finance & Banking
Govt. Titumir College, Dhaka

This chapter will develop a theoretical framework that will serve as a positive theory for the appropriate type and contribution of financial markets in Bangladesh Economy. The approach is based on the identification of imperfections (such as externalities, incompleteness, failures and asymmetries) in perfectly competitive or laissez-faire financial markets in Bangladesh and analyzing how they result in inefficient or non-optimal outcomes. Included in this section is a discussion of the externality of risk, three types of externalities of information, destructive competition, natural monopolies and too-big-to-fail problems. The next step is to explain how certain regulatory measures or government interventions can improve upon the laissez-faire market outcomes. The chapter concludes by showing how under more realistic assumptions about how markets actually operate that financial markets are more efficient, more stable and less likely to transmit disturbances to the overall economy if they are properly regulated.

* Introduction:
* Background of financial market in Bangladesh:
* Financial Sectors in Bangladesh:
* Types of Financial market
* Financial market :
* Money market:
* Capital market:
* Role financial market in economic development:
* Bank:
* List of banks in Bangladesh:
* Central Bank: Bangladesh Bank:
* Nationalized Commercial Banks:
* Private Commercial Banks:
* Specialized Banks:
* Roles of the Regulatory institutions in the Capital Market of Bangladesh: * The Security and Exchange Commission (SEC):
* The major Function and Responsibilities of the SEC are: * Stock Exchange:
* The Investment Corporation of Bangladesh:
* The Major Activities of ICB are:
* Insurance Companies:
* Leasing Companies:
* Conclusion:

Since the independence of our country on December 16th, 1971 until December 1989, the Bangladeshi financial market sector has been controlled under the strict directives of government and The Bangladesh Bank – the central bank of Bangladesh. From 1974, the discount rate policy was often used to support Bangladesh Bank’s administered interest rate policy. In the early years of Bangladesh, discount rate, reserve ratio and moral suasion (known as open mouth operation) were important to control money supply. With the introduction ti Financial Sector Reform Program in 1990, the Bangladesh Bank almost closed both the refinance and rediscount window with a view to developing inter-bank market . Nevertheless the central bank kept the discount rate between 5-8 percent. Any bank that needed finance started approaching the inter -bank market instead of Bangladesh Bank’s window’s; thereby. Discount rate policy, though internationally, lost its credibility. There is no denying the fact that the financial system plays a significant role in the economic development of a country. The importance of an efficient financial sector lies in the fact that, it ensures domestic resources mobilization, generation of savings, and investments in productive sectors. In fact, it is the system by...
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