An Assignment on The Role of Local and International Financial Markets and Institutions in the

Development of Bangladesh's Economy.

Course Name – Principles Of Finance

Course Code- FIN2122
Section - 1

Submitted To:
Name: Najifa Tasneem Teesha
Lecturer, Finance
Southeast University
Submitted By -
Name: Minhazul Islam Chowdhury
ID - 2017010000130
Batch - 45
Introduction:
Financial market has been playing an important role in the development of Bangladesh. There
are many part of local financial market for instance, money market, stock market, bond market,
insurance market, foreign exchange market etc. And for foreign financial market, investing in
mega projects, capital market and others. However, Money moves from one part to another part
of the financial market due mostly to the relatives of returning different segments. Normally
money goes to that part where the return rate is high. As long as the rate of return is higher in a
particular part, the volume of investment in that segment will continue to grow. If the
financial market is integrated, any opportunities for arbitrage will lead to an acceleration of
investment in the segment with high rate of return and to a corresponding deceleration of
investment in other segments of the financial market. Therefore, the integration of financial
market and the consequent reduced opportunities for arbitrage are essential for stabilizing the
flow of funds to different segments of the financial market promptly and efficiently. The
integration of financial market is important for healthy and balanced growth of all the major
components/pillars of the financial system and allows market participants to realize broadly
similar rates of returns after allowing for risk and tenor in different segments of financial market.

Characteristics of Local Bangladesh’s Financial Market:

The local financial market of Bangladesh mainly runs of money market actively participated by
banks and financial institutions, bond markets, insurance market, and capital market.

The Financial System of Bangladesh

Money Market Capital Market Foreign Exchange Market

Banks Investment Banks Authorized Dealers

NBFI’s Stock Exchanges Authorized Importers

Primary Dealers Credit Rating Co.

 Money Market:

Banking sector is the main player in the money market of Bangladesh. This sector is
developing under full control and supervision by the central bank of the country,
Bangladesh Bank (BB). At present there are 47 scheduled banks operating in Bangladesh
of which 4 of them are state owned commercial banks.4 are government-owned
specialized banks. 30 are private commercial banks including 7 Islamic banks and 9 are
foreign commercial banks. The major source of the funds of banks is collecting deposits
is collecting deposit from public, Fixed deposit and others.

 Government Bond Market:

Government issues different kind of bonds or tenures for long term financing of its
deficits.

 Insurance Market:

A total 62 insurance companies operating in Bangladesh. From those 62 companies 18

provide life insurance, 44 are in the general insurance field. The state owned insurance
company is “Jiban Bima Corporation”. The major source of the insurance company’s
fund comes from insurance premium.

 Capital Market:

The capital market is consists of two stock exchange in Bangladesh, One is Dhaka Stock
Exchange, another is Chittagong Stock Exchange. These two stock exchange controlled
by security exchange commission. The capital market has flourished noticeably due to
stronger economic fundamentals of the listed companies. And there are foreign investors
in capital market of Bangladesh which is creating an important role in Bangladesh.
The Role of International Financial Markets and Institutions in the Development of
Bangladesh's Economy:

Bangladesh has now some on going mega projects like: Padma bridge, The nuclear
powerplant in ruppur, the underwater tunnel in karnaphuli river, matar bari sea port, cox’s
bazar international airport and so on. These projects are handling by foreign companies
and agencies. Those financial companies making a great role in our financial market and
The development of Bangladesh’s economy.

Comparison of the different sector of financial market:

There are no doubt that the financial market of Bangladesh is growing with uptrend
fluctuation. However the asset composition of part of financial market is changing over
the years. In recent days, capital market has done very well rather than other segments of
the financial market.

Conclusion:

Bangladesh’s economy is developing day by day in both local and foreign investments.
There are several mega projects going on by different foreign companies. Which is
helping Bangladesh to transform into a developed country from developing country.
Reference’s:

1. www.bb.org.bd/index.php
2. https://www.dsebd.org/

3. http://www.jbc.gov.bd/
4. https://www.google.com/