A Critical Study on Power and White-Collar Crime in Stock Market Debacle of Bangladesh

Abstract

The stunning debacle in Bangladesh's stock market resulted from market manipulation, which left public investors with a serious loss of invested capital amid warning signals in the market before the crash. Bangladesh’s stock market had faced a steep decline from 1996, though it began to recover in 2006; however, some miscreants traders made the whole financial and socio-economic condition vulnerable. In addition to individual investors, virtually all commercial banks have a significant presence in the stock market. The Dhaka Stock Exchange was about 5.6 times higher. Revenue and market capitalization were multiplied by 11.1 and 61.7, respectively. However, when the bubble finally burst on December 19, 2010, the market dropped by 6.7% in a single day. Investors are becoming pessimistic as there has been little in the way of upticks in stock prices. Four moneymaking psychological traits of domestic investors were identified in this study on power and white-collar crime: greed, envy, speculation, and overconfidence; and four loss-minimizing and capital- protecting psychological traits were identified as contributing to the bursting of the bubble: panic, frustration, lack of self-confidence, and distrust. The banks, brokers, and manipulators reaped the greatest rewards, while the most naive and greedy little investors lost heavily. The market will be less volatile, more stable, and continue longer if most investors understand the risks and potential returns and if regulators do their tasks honestly and skillfully.