Capital Market

In: Business and Management

Submitted By rion123
Words 10549
Pages 43
CONTEXT

1.0

Introduction

Capital Market mainly refers to the Stock and Share market of the country. When banking system cannot totally meet up the need for funds to the market economy, capital market stands up to supplement it. Companies and the government can raise funds for long-term investments via the capital market. The capital market includes the stock market, the bond market, and the primary market. Securities trading on organized capital markets are monitored by the government; new issues are approved by authorities of financial supervision and monitored by participating banks. Thus, organized capital markets are able to guarantee sound investment opportunities. This paper reveals the various aspects of the Capital Market in Bangladesh.

1.1

Objectives

Capital market, being an essential element of today’s economy, demands an intensive and special attention. The objective of this study is to look into every aspect of Bangladesh capital market and identify its various pros and cons along with some recommendations to overcome the existing problems. The specific objectives of this study are: To give an overall idea about the capital market-its structures, functions, importance, etc. To identify the current situations of our capital market of Bangladesh. To compare the relative conditions of Bangladesh capital market to other countries of the world. To sort out the problems associated with our capital market. To suggest some practicable solutions to these problems.

- Page | 1 -

1

Ch[pt_r 1

Secondary data and information were used in preparing this seminar paper, and these were collected through teamwork by adopting the following processes: ■ Visiting in person, the following organizations and respective key personnel: Dhaka Stock Exchange (DSE) Dhaka Chamber of Commerce (DCC) Bangladesh Bank (BB) Monetary Policy Department (MPD), BB ■…...

Similar Documents

Capital Market

...A PROJECT ON CAPITAL MARKET GUIDE CERTIFICATE It is hereby certified that the project report on “CAPITAL MARKET”, being submitted by Shelly jumba student of the degree of Master of Business Administration (3rd Sem) of CT Institute of Management and Information Technology, Jalandhar which affiliated to Punjab Technical University, Jalandhar is an original work carried out successfully under my guidance and supervision and that no part of this project has been submitted for any other degree/ diploma. The sincerely efforts put in during the course of investigation is hereby acknowledged. Project guide Miss Shivani jagneja Lect. CTIM& IT DECLARATION This project entitled Empirical Study on “CAPITAL MARKET” is submitted in partial fulfilment of the requirement for the award of degree of master of business administration of Punjab technical university, Jalandhar. .This research work has been done only for MBA only and none of this research work has been submitted for any other degree. The assistance and help during the execution of the project has been fully acknowledged. PREFACE The successful completion of this project was a unique experience for us because by visiting many place and interacting various person, I achieved a better knowledge about this project. The experience which I gained by doing this project was essential at this turning point of my carrier this project is being submitted which content detailed analysis of the research under taken by......

Words: 16886 - Pages: 68

Capital Market

...RECENT TRENDS IN CAPITAL MARKET OF BANGLADESH: CRITICAL EVALUATION OF REGULATION by Syed Golam Shahjarul Alam A thesis submitted in partial fulfillment of the requirements for the degree of Professional Master in Banking and Finance Examination Committee: Dr. Sundar Venkatesh (Chairperson) Dr. Winai Wongsurawat Dr. Yuosre Badir Nationality: Previous Degree: Bangladeshi Master of Business Administration University of Dhaka Dhaka, Bangladesh Bangladesh Bank (Central Bank of Bangladesh) Scholarship Donor: Asian Institute of Technology School of Management Thailand May2012 ACKNOWLEDGEMENTS My greatest Gratitude is given to Dr. Sundar Venkatesh, my project advisor, for his deep insight in capital market, which helped me to accomplish the project paper. His dedication towards teaching, motivating and supervising influenced me greatly, leading to do my project work carefully and seriously. I wish to express my deepest gratitude and appreciation to Bangladesh Bank, My office, for granting me a scholarship, to pursue my Masters in banking and finance. I express my gratitude and deepest appreciation to my friend Ms. Senjuti binte rafiq, My Colleagues in Bangladesh Bank and DSE Library staffs who helped me by providing valuable suggestions and necessary data for my analysis. I am very much thankful to Dr. Winai Wongsurawat and Dr. Juthathip Jongwanich for their valuable suggestions regarding my project. I express my gratitude and deepest appreciation to Ms...

Words: 15692 - Pages: 63

Capital Market

...Capital market is one of the most important segments of the Indian financial system. It is the market available to the companies for meeting their requirements of the long-term funds. It refers to all the facilities and the institutional arrangements for borrowing and lending funds. In other words, it is concerned with the raising of money capital for purposes of making long-term investments. The market consists of a number of individuals and institutions (including the Government) that canalise the supply and demand for long -term capital and claims on it. The demand for long term capital comes predominantly from private sector manufacturing industries, agriculture sector, trade and the Government agencies. While, the supply of funds for the capital market comes largely from individual and corporate savings, banks, insurance companies, specialised financing agencies and the surplus of Governments. The Indian capital market is broadly divided into the gilt-edged market and the industrial securities market. ▪ The gilt-edged market refers to the market for Government and semi-government securities, backed by the Reserve Bank of India (RBI). Government securities are tradeable debt instruments issued by the Government for meeting its financial requirements. The term gilt-edged means 'of the best quality'. This is because the Government securities do not suffer from risk of default and are highly liquid (as they can be easily sold in the market at their current price). The......

Words: 1847 - Pages: 8

Capital Market

...these investors, the capital market needs: 1. a safe system of business laws and low probability of confiscatory taxation/regulation; 2. a well-developed investment banking industry; 3. a well-developed system of brokerage and financial transactions, and; 4. well-developed media, particularly financial reporting. These characteristics are found in (indeed make for) a well-developed financial market. 3. Securitization leads to disintermediation; that is, securitization provides a means for market participants to bypass intermediaries. For example, mortgage-backed securities channel funds to the housing market without requiring that banks or thrift institutions make loans from their own portfolios. As secur itization progresses, financial intermediaries must increase other activities such as providing short-term liquidity to consumers and small business, and financial services. 4. Financial assets make it easy for large firms to raise the capital needed to finance their investments in real assets. If Ford, for example, could not issue stocks or bonds to the general public, it would have a far more difficult time raising capital. Contraction of the supply of financial assets would make financing more difficult, thereby increasing the cost of capital. A higher cost of capital results in less investment and lower real growth. 1-2 5. Even if the firm does not need to issue stock in any particular year, the stock market is still important......

Words: 668 - Pages: 3

Capital Market

...financial institution’s capital position and financial condition or have not been identified to the extent that the situation represents an unsafe and unsound banking practice. Determination of whether the institution’s risk-management system can measure and control its risks is of particular importance. The primary components of a sound risk-management process are a comprehensive risk-measurement approach; a detailed structure of limits, guidelines, and other parameters used to govern risk taking; and a strong management information system for monitoring and reporting risks. These components are fundamental to both trading and nontrading activities. Moreover, the underlying risks associated with these activities, such as market, credit, liquidity, operations, and legal risks, are not new to banking, although their measurement can be more complex for trading activities than for lending activities. Accordingly, the process of risk management for capitalmarkets and trading activities should be integrated into the institution’s overall riskmanagement system to the fullest extent possible using a conceptual framework common to the financial institution’s other business activities. Such a common framework enables the institution to consolidate risk exposure more effectively, especially since the various individual risks involved in capital-markets and trading activities can be interconnected and may transcend specific markets. The examiner must......

Words: 9713 - Pages: 39

Capital Market

...Introduction: The capital market is the engine of growth for an economy, and performs a crucial role in acting as an intermediary between savers and companies seeking additional financing for business expansion. Stock market is part & parcel of capital market. Contribution of any stock exchange generally leads to economic growth by increasing the funds to finance industry and other enterprise. Stock Exchange is an autonomous body formed by shareholders/members. It can take various decisions independently. The objective of Stock Exchange is to provide a market place along with facilities for bringing together the buyers and sellers of securities, promote just and equitable principles of trade, protect the interest of the investors. Definition of ‘Dhaka Stock Exchange – DSE’ The financial marketplace headquartered in Dhaka, Bangladesh. The Dhaka Stock Exchange was incorporated in 1954, and formal trading began in 1956. Originally, the exchange was called the East Pakistan Stock Exchange Association Ltd, and in 1962 the name was revised to East Pakistan Stock Exchange Ltd.  Importance of the study: Trading system is one of the most important functions of stock market operation. This report tries to find out the trading system of Dhaka stock exchange. Stock market is an essential part of capital market. Trading has now become automated, led by the Dhaka Stock Exchange through the central depository. In the present automated trading environment, bids/offers, depth, and......

Words: 16966 - Pages: 68

Capital Market

...CAPITAL MARKET IN BANGLADESHTRENDS AND PRACTICES PRESENTED BY: AMALENDU MUKHERJEE & MD.GHULAM FARUQUE DHAKA, BANGLADESH BANGLADESH: PROFILE Geographical Location : 20°34’ &26°38’ North Latitude 88°01’ & 92°41’ East Longitude Area( Sq.km) : 147570 Standard Time : GMT+6 Hours Population (Mn) : 152.6 Population Density/Sq.Km.,2006 (Estimated): 953 Inflation(2006-07): 7.22% 6.51 GDP(2006-07): Per capita national Income (in Tk.) 35904 Capital market in Bangladesh Bangladesh capital market is one of the smallest in Asia but the third largest in the south Asia region. It has two full-fledged automated stock exchanges namely Dhaka Stock Exchange (DSE) and Chittagong Stock Exchange (CSE) and an over-the counter exchange operated by CSE. It also consists of a dedicated regulator, the Securities and Exchange Commission (SEC), since, it implements rules and regulations, monitors their implications to operate and develop the capital market. It consists of Central Depository Bangladesh Limited (CDBL), the only Central Depository in Bangladesh that provides facilities for the settlement of transactions of dematerialized securities in CSE and DSE. History of Stock Exchange Dhaka Stock Exchange was set up on 28th April, 1954 that started formal trading on early 1956. Post–independence government did not promote a capital market during the first five years, and it was activated again in 1976 with 9 issues on board. In 1995, a second bourse, the Chittagong Stock Exchange, was......

Words: 1756 - Pages: 8

Capital Markets

...exchanges is attributable to the difference between the US and Israeli Capital markets Law, and that law really matters. Do you agree with Ariel Yehezkel? Why does law matter? Introduction: Capital market is a market where buyers and sellers engage in trade of financial securities like bonds, stocks, etc. The buying/selling is undertaken by participants such as individuals and institutions. Capital markets help channelise surplus funds from savers to institutions which then invest them into productive use. Generally, this market trades mostly in long-term securities. The capital market efficiency is usually determined by how well the regulatory measures are defined since for there to be a proper functioning capital markets there has to be factors such as integrity and transparency as well as accountability. The law has been known to be the best institution to provide a mechanism that ensures the factors are well enhanced as well as promoted. Why the law matters The significance of protecting the proper functioning of markets has long been recognized and the law is deemed to be a proper tool to achieve this. The importance of protection of protecting the markets as opposed to the individuals within it has also been recognized and legislative intervention is justified. It is important to highlight the extent to which the law has been considered to be of great importance in many jurisdictions in that capital markets are regulated at two levels, namely; Self-regulation by......

Words: 2858 - Pages: 12

Capital Markets

...Capital Market and Money Markets A financial market that works as a conduit for demand and supply of debt and equity capital. It channels the money provided by savers and depository institutions like banks, credit unions, and insurance companies among others, to borrowers and investees through a variety of financial instruments like bonds, notes, and shares that are referred to as securities. A capital market is not a compact unit, but a highly decentralized system made up of three major parts: stock market, bond market, and money market. It also works as an exchange for trading existing claims on capital in the form of shares. Essentially, capital is wealth, usually in the form of money or property. Capital markets exist when two groups interact: those who are seeking capital and those who have capital to provide. The capital seekers are the businesses and governments (sometimes individuals) who want to finance their projects and enterprises by borrowing or selling equity stakes. The capital providers are the people and institutions who are willing to lend or buy, expecting to realize a profit. By participating in the stock and bond markets, which are the pillars of the capital markets, you commit your capital by investing in the equity or debt of issuers that you believe have a viable plan for using that capital. Because so many investors participate in the capital markets, they make it possible for enterprises to raise substantial sums enough to carry out much larger......

Words: 1385 - Pages: 6

The Capital Market

...Chapter 1: The Capital Market [Simplified CSC Notes] • Capital is not what you make but what you keep • Wealth is savings, capital comes from savings • Savers: Individuals, corporations, governments • You can take your savings and go into Direct Investments (like property, equipment, infrastructure) - these are called real assets • Or you can take your savings into Indirect Investments (like stocks; we buy share of a company and we give company the money, bonds; we lend money to companies and governments, GIC; we leave money with the bank and the bank pays us a level of interest) - these are called financial assets/ claims • Bonds are claims against asset • The money we give to users, they give us one of these claims (financial assets), they take the money and invest in real assets, so we buy a stock of the company that buys apartment buildings. Either way we're still investing in apartment buildings, directly we own the real thing and indirectly have a financial claim on the real thing 3 Characteristics of Capital: 1) It is mobile - it can travel anywhere in the world 2) Sensitive to the environment - if you're in an area with high taxes you can move to an area with low taxes. If you're in an area with low interest rates, low returns you can move to an area with high interest rates, high returns to get a better yield 3) Scarce - you have so much of it • The only source of capital is savers. If somebody can't save, they have no investment......

Words: 1710 - Pages: 7

Capital Market

...The commonwealth is the sole Shareholder in MPL. The Medibank Private Sale Act 2006 (Cth) (Sale Act) was enacted in 2—6 and facilitates the sale of MPL. On 26 March 2014, the Australian Government accounted its intention to sell MPL by IPO. The main purpose of Medibank Private’s IPO is to raise capital for the corporation. The firm will raise a large amount of equity funds when the IPO occurs. Market Creation A major reason for Medibank Private to go public is that the management hopes that their shares will rise in value after the IPO, and normally it would be easier to raise debt funds after being listed as well. Employee Retention The other aspect is that the management might hope to retain key employees by providing share options as part of their benefits. Due to the value of shares increasing, these may come with restrictions that they may not be sold for between one and three years after the IPO. Improvement of liquidity Furthermore, the liquidity would be improved for investor enter and exit after IPO. Especially for short-term investors, such as the liquidity is important to plan out their exit strategy. Competitive advantages and Financing Opportunities The IPO enables a company to raise funds in order to increase its asset base. It gives Medibank Private competitive advantages to against other similarly sized companies in this industrial sector, such as (BUPA). Also, it would be easier to raise debt, and the cost is much lower than contracting debt......

Words: 296 - Pages: 2

Capital Market

...requisite degree of transparency. Demutualised exchanges will be forced to account to their shareholders regarding the bottom line as well as corporate governance. Secondly, there will be more investor participation. The new corporation will be more profit orientated due to shareholder accountability. Unlike a mutual structure where often only broker-dealers maybe members, a demutualised exchange affords both institutional and retail investors the opportunity to become shareholders. A demutualised exchange will have greater flexibility to accommodate the needs of institutional investors as customers, and potentially, as owners. Thirdly, it is the resources for capital investment. A competitive stock exchange must be able to respond quickly to global competitive forces and technological advances. With the capital raised from initial public offerings or private investment and a heightened awareness of accountability to stakeholders, a stock exchange should have both the incentive and the resources to invest in the competitiveness of its information systems. So to be competitive, products and services must not only be timely and cost effective, but also reliable. The second part of the structural changes needs to be at the SEC of Bangladesh. The fundamental issue here is: what is the regulator doing to help minimise risk for the investors? The absolute minimum the SEC can ensure is to have risk minimising tools. As a first step they can introduce scrip netting facility,......

Words: 749 - Pages: 3

Capital Market

...Bangladesh's stock market performance, measured in terms of the stock price index, has been one of the best globally for a number of years. Its upward surge defied global and regional market developments. When almost all markets across the globe collapsed during the global economic crisis, DGEN was perhaps one of the very few which defied the global trend and maintained its upward progression fueled by local developments/conditions. When it started its upward trend in 2007, the market was certainly undervalued, and there were fundamental economic reasons for it to go up. At that time the average Price/Earning (P/E) ratio was in single digit and the market capitalization was less than 10 per cent of gross domestic product (GDP). The sustained upward surge, however, went beyond what could be justified by economic fundamentals by early 2010. Since mid-2010, as the index crossed the 5000 mark, the market has clearly been driven by speculative forces. During the last two-month period leading up to the peak, the index increased by more than 2000 points before crossing the 8900 level on December 5. To put it in proper perspective, the index level was at about 1500 until this recent surge started in 2007. Daily market turnover increased 30 fold about Tk. 1.0 billion to Tk. 33 billion over the three-year period. Clearly, economic fundamentals cannot support this level of valuation gain and turnover, and the market is bound to correct itself once it runs out of steam. The......

Words: 1689 - Pages: 7

Capital Market

...the capital markets in Bangladesh, notably from December 2010 till February of 2011, has been very poor compared with its performance over the last five years. The index fell from a high of around 8,900 points to 5,200 points, a drop of almost 42 percent in just three months. Bangladesh capital markets have been in the top three best performing markets in the world over the last three years. However, its recent performance has cast a big doubt about its future performance. It is a case of “too much money chasing too few stocks”. This correction in the market has been long overdue because there was too much money in the stockmarket in too few stocks. This inflationary pressure was finally controlled by the central bank by raising its cash reserve ratio (CRR) and statutory liquidity ratio (SLR) thus resulting in limiting the liquidity flow into the capital market. The interbank call money rate (DIBOR Dhaka Interbank Offer Rate) went up by 189 percent. One of the main reasons for this was that the domestic banks had too much of their money invested in the stock market, for quick and easy profit taking and as a result caused the stock market to rise even higher. So, to control the excess money in the capital market the central bank took these drastic measures, as it is within their right to do so, to control inflation. The problems of the capital markets in Bangladesh are structural, and, actually quite far-reaching than what meets the eye. As we all know, the capital markets......

Words: 382 - Pages: 2

The Capital Market

...An overview of Bangladesh Capital Market: Fraudulent Practice An overview of Bangladesh Capital Market: Fraudulent Practice Prepared for Barrister M. Zillur Rahman Lecturer, Legal Environment of Business Institute of Business Administration (IBA) University of Dhaka Prepared by Ashraful Islam Dipankar Ghosh Roll: 18 Roll: 36 MBA 45E INSTITUTE OF BUSINESS ADMINISTRATION University of Dhaka Date: January 07, 2012 i An overview of Bangladesh Capital Market: Fraudulent Practice January 07, 2012 Barrister M. Zillur Rahman Lecturer Institute of Business Administration University of Dhaka Dear Sir: Subject: Submission of the term paper “An overview of Bangladesh Capital Market: Fraudulent Practice.” We are pleased to present you our term paper “An overview of Bangladesh Capital Market: Fraudulent Practice.” We have extensively enjoyed working on this topic. It has been a very interesting and informative experience for us. While working on this report we have learnt about capital market in Bangladesh. Due to the fraudulence practice in Bangladesh capital market several people has suffered a great loss. We believe this through study on the capital market of Bangladesh will help us immensely in our future life when we will involved more with our capital market. We hope our effort will meet the level of your expectations. Your guidelines and advice have been very effective and helped us a lot to complete our report. In case of any further query, please feel...

Words: 5713 - Pages: 23

How might a Christian apply these beliefs in situations of conflict | Watch now! | Inteligent - Cultura generala