Impact of Capital Market of Economy of Bangladesh....

2. MD. MUWAS MIA
ID: 151-11-4362

3. OUR PRESENTATION GOING ON
Is capital market important for economic development of Bangladesh?

4. X Textiles PVT. LTD
Wants To Expand Business
Value of
company
100cr

5. HOW HE COLLECT THE MONEY?

6. Profit not sufficient
to fund expansion
I need 25cr
as lone
You need to
pay 15%
Interest
NEED FUND TO EXPAND

7. Interest Charge
Vary high, can
not pay so much
I will sell my
ownership as
share on stock
market
WHAT TO DO?
25% Ownership
split into 25 lakh
shares each worth
100tk

8. FROMBANK
Mr. X can approach bank, but it will not prove healthy
option because:
Bank will charge him high interest rate
Bank scrutinizes the paper, documents
Very time consuming process

9. MAJOR ELEMENT OF CAPITALMARKET
Financial
Instrument/ Assets
Financial
Intermediaries
Financial Market
What? Who? Where?
Link up between
severs to investor Capital
Market
Money
Market
Primary Market
Secondary
Market

10. WHAT IS CAPITAL MARKET?
Equity is personal investment of owners.
Debt is small business owner borrow and
must repay with interest.
Capital market is a market where financial assets are traded.
Deals with long term securities. Bonds, Shares. Treasury bills.
Two Segment
Debt
capital
Equity
capital

11. MAJOR SUPPLIERS OF FUNDIN CAPITAL MARKET
• Personal savings
• Family and
friends
• Partners
Equity Capital Debt Capital
• Commercial banks
• Internal method
(Leasing, Credit
cards)

12. SUB MARKET OF CAPITAL MARKET
Primary Market
Secondary Market
Capital Market

13. SUB MARKET OF CAPITAL MARKET
PrimaryMarket:
It is the market in which share, Debenture and other securities are sold first time
for collecting long term capital. The primary market also called new issuer
market
SecondaryMarket:
Fund traded investor to investor. Seller is investor. Secondary market called
liquidity market. Provide information about price.
Security Traded
Security Traded
IPO
OTC

14. SECONDARY MARKET
Broker Broker
Stock Exchange
A B C D
Investor Investor
Buying
Order
Selling
Order
Listed Companies On
Stock Exchange

15. SHAHREEN IVITA
ID: 151-11-4411

16. CAPITALMARKET IN BANGLADESH
Bangladesh capital market is one of the smallest in Asia but the third largest in
south Asia. There are two stock exchanges in Bangladesh.
Dhaka Stock Exchange (DSE) (Formerly East Pakistan Stock Exchange)
Chittagong Stock Exchange (CSE)
Both are regulated by Bangladesh Securities Exchange Commission (BSEC)

17. ROLE OF CAPITAL MARKET
Primary role of capital market is raise long term funds. This fund rising the
performance of the stock and bond market within capital market.
Speed up economic
growth and
development
Service provision
Proper regulation of
funds

18. THE ROLE OF CAPITAL MARKET IN AN ECONOMY
Provide Long term finance for productive
investments.
Provide equity capital infrastructure
development for socio economic
Equitable distribution of wealth is a key indicator
of poverty reduction.
Provides opportunity for the public to invest their
savings.

19. THE ROLE OF CAPITAL MARKET IN AN ECONOMY
Gateway to Bangladesh for global and foreign
portfolio investors
Capital market also helps increase savings and
investment
Increases the long-term savings (pensions,
funeral covers, etc.)

20. OBSTACLES TO OVERCOME
The Securities and Exchange Commission (SEC) and capital market
participants are weak capacity to regulate, monitor, supervise and has limited
resources to devote to its development.
Market participants, including brokers, dealers, and merchant bankers.
However there are no professional standards and minimal qualification
requirements (e.g., examinations and professional training)
Lack of infrastructure and physical facilities
Lack of proper and adequate disclosures

21. OVERCOME
Enhancement of ethical standard of all the parties
The listed companies that pay regular dividend should be given tax incentives
Ethical standard of all interest groups must be enhanced.