Development of Financial Markets and Financial Stability in Bangladesh
Date
2015-07-01
Authors
Journal Title
Journal ISSN
Volume Title
Publisher
School of Business, Independent University,Bangladesh
Abstract
The main objective of this paper is to analyze the financial market development of
Bangladesh during 2010-2015. Although having crisis triggered by capital market
failure and ailing performance of SCBs, the progress of financial markets during last
five to six years, on various counts are noteworthy. Even after taking into consideration
of the less than required security measures, the development of payment and settlement
system is tremendous and comparable to international standard. The growth of banking
market, largest financial market of Bangladesh has been accompanied with welldesigned financial stability measures. Finally, it was suggested that the regulatory
authorities should continue the coordinatedoperation of financial watchdogs (BB,
BSEC, MRA and IDRA) along with the measuresto develop financial market capacity
to ensure sustainable development of the financial sector in Bangladesh.
Description
The primary aim of financial market development must be to aid economic growth
and development. The essential role of financial markets is to mobilize financial
resources from ultimate lenders and allocate them in an efficient manner among
competing uses (ultimate borrowers) in the economy, thereby contributing to growth
both through increased investment and through enhanced efficiency in resource use. It
is also widely recognized that the financial sector helps economic development by
providing payment services which improves overall efficiency of the economy. The
development of financial market is also critical for effective transmission of monetary
policy impulses to the rest of the economy. Monetary transmission cannot take place
without efficient price discovery specially with respect to interest rates and exchange
rates. Deep and liquid financial markets contribute to efficient price discovery in
various segments of the financial market. In view of the various roles played by the
financial markets, it is important that financial markets are well developed and well
integrated.
Keywords
Money Market, Foreign Exchange Market, Financial Market, NBFI