Integration of Financial Market To develop stock market
Article On
Integration of Financial Market and Its Implication of Stock Market Development in Bangladesh: An Evaluation
Submitted To-
Md. Raisul Islam.
Course Instructor,
Financial Product Marketing.
Department of Marketing, 2nd batch
Jahangirnagar University
Submitted By-
Name
ID
Arifa Yasmin
646
Md. Tanjil Mahmud
673
Kumar Avijit Das Gupta
674
Md. Aman Uddin
2119
Department Of Marketing, 2nd Batch
Jahangirnagar University.
Date of Submission- 10th August, 2014.
Integration of Financial Market and Its Implication of Stock Market Development in Bangladesh: An Evaluation
Abstract
This paper attempts to test for the integration among various segments of the financial market in Bangladesh. Both casual observations and statistical analysis presented in this paper indicate that certain components of the money market such as deposit money banks, nonbank financial institutions and government treasury securities market are highly integrated. The market for the instruments of National Saving Directorate is also integrated, albeit with some sort of divergent tendency due to existence of administered interest rate. On the other hand, the interbank call money market and the stock market are not integrated with the rest of segments of the financial system due to their high volatility in the recent past. Deposit rate of the banks is found to be the “reference rate” for the Bangladesh’s financial system. Therefore, efforts must be made to make this rate as much market based as possible since most other rates tend to move in line with the movements of the reference rate. Effectiveness of monetary policy, which generally operates through the short end of the interest rate structure, would also depend on how it impacts the reference rate.
Key words: Integration, financial market, stock market, reference rate.
1. Introduction
Financial market has been playing an increasingly important role in the development of
Integration of Financial Market and Its Implication of Stock Market Development in Bangladesh: An Evaluation
Submitted To-
Md. Raisul Islam.
Course Instructor,
Financial Product Marketing.
Department of Marketing, 2nd batch
Jahangirnagar University
Submitted By-
Name
ID
Arifa Yasmin
646
Md. Tanjil Mahmud
673
Kumar Avijit Das Gupta
674
Md. Aman Uddin
2119
Department Of Marketing, 2nd Batch
Jahangirnagar University.
Date of Submission- 10th August, 2014.
Integration of Financial Market and Its Implication of Stock Market Development in Bangladesh: An Evaluation
Abstract
This paper attempts to test for the integration among various segments of the financial market in Bangladesh. Both casual observations and statistical analysis presented in this paper indicate that certain components of the money market such as deposit money banks, nonbank financial institutions and government treasury securities market are highly integrated. The market for the instruments of National Saving Directorate is also integrated, albeit with some sort of divergent tendency due to existence of administered interest rate. On the other hand, the interbank call money market and the stock market are not integrated with the rest of segments of the financial system due to their high volatility in the recent past. Deposit rate of the banks is found to be the “reference rate” for the Bangladesh’s financial system. Therefore, efforts must be made to make this rate as much market based as possible since most other rates tend to move in line with the movements of the reference rate. Effectiveness of monetary policy, which generally operates through the short end of the interest rate structure, would also depend on how it impacts the reference rate.
Key words: Integration, financial market, stock market, reference rate.
1. Introduction
Financial market has been playing an increasingly important role in the development of
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