The Structure of Financial System of Bangladesh -
The Structure of Financial System of Bangladesh
Introduction:
Financial system is a system which tones up the savings-investment process of a country.Financial system plays a significant role in the economic development of a country. Theimportance of an efficient financial sector lies in the fact that, it ensures domestic resourcesmobilization, generation of savings, and investments in productive sectors. In fact, it is thesystem by which a country’s most profitable and efficient projects are systematically andcontinuously directed to the most productive sources of future growth. The financial systemnot only transfers funds from savers to investors, it also selects projects which will yield thehighest returns, accumulates sufficient quantities of capital to fund the range of investmentprojects across economic activities, accounts for price risks across assets, monitor performance,and enforce contracts. According to the McKinnon- Shaw hypothesis (1973), the conventionalwisdom is that flexibility and efficiency of the financial system are crucial to the growth anddevelopment of a market economy. A comprehensive study by King and Levine (1993) fromacross 119 developed and developing countries over the 1960-1989 period provides compellingevidence that economic growth is dramatically dependent on the size of financial sector, creditto private sector and enterprises and interest rates. The larger the financial sector in thecontext of the overall economy, the greater the share of lending by depository rather thancentral banks, and the greater the share of credit to private sector rather than public sector, thegreater is the rate of economic growth. Major Components of a Financial System and their roles:
Financial System in Bangladesh
Money Market
1.Bangladesh Bank
2.All Banks
3.Non-Bankfinancialinstitutions
4.Money Changers
5.Credit ratingagencies
Capital Market
A. Securities Market
1.Securities &ExchangeCommission
2.StockExchanges: DSE,CSE
3.InvestmentCorporation of
Introduction:
Financial system is a system which tones up the savings-investment process of a country.Financial system plays a significant role in the economic development of a country. Theimportance of an efficient financial sector lies in the fact that, it ensures domestic resourcesmobilization, generation of savings, and investments in productive sectors. In fact, it is thesystem by which a country’s most profitable and efficient projects are systematically andcontinuously directed to the most productive sources of future growth. The financial systemnot only transfers funds from savers to investors, it also selects projects which will yield thehighest returns, accumulates sufficient quantities of capital to fund the range of investmentprojects across economic activities, accounts for price risks across assets, monitor performance,and enforce contracts. According to the McKinnon- Shaw hypothesis (1973), the conventionalwisdom is that flexibility and efficiency of the financial system are crucial to the growth anddevelopment of a market economy. A comprehensive study by King and Levine (1993) fromacross 119 developed and developing countries over the 1960-1989 period provides compellingevidence that economic growth is dramatically dependent on the size of financial sector, creditto private sector and enterprises and interest rates. The larger the financial sector in thecontext of the overall economy, the greater the share of lending by depository rather thancentral banks, and the greater the share of credit to private sector rather than public sector, thegreater is the rate of economic growth. Major Components of a Financial System and their roles:
Financial System in Bangladesh
Money Market
1.Bangladesh Bank
2.All Banks
3.Non-Bankfinancialinstitutions
4.Money Changers
5.Credit ratingagencies
Capital Market
A. Securities Market
1.Securities &ExchangeCommission
2.StockExchanges: DSE,CSE
3.InvestmentCorporation of