Financial system of Bangladesh is getting emerged with the assistance of Bangladesh Bank, powered by Bangladesh Bank Orderwhich is now acting as regulatory body of financial institutes. Under the guardianship of Bangladesh Bank, 56 scheduled banks and 31 non-bank financial institutes are working actively in the country.
The financial crisis of — began in July  when a loss of confidence by investors in the value of securitized mortgages in the United States resulted in a liquidity crisis that prompted a substantial injection of capital into financial markets by the United States Federal Reserve, Bank of England and the European Central Bank.
In Septemberthe crisis deepened, as stock markets worldwide crashed and entered a period of high volatility, and a considerable number of banks, mortgage lenders and insurance companies failed in the following weeks.
Overall tightening of credit with financial institutions making both corporate and consumer credit harder to get; Financial markets stock exchanges and derivative markets that experienced steep declines; Liquidity problems in equity funds and hedge funds; Devaluation of the assets underpinning insurance contracts and pension funds leading to concerns about the ability of these instruments to meet future obligations: Increased public debt public finance due to the provision of public funds to the financial services industry and other affected industries, and the Devaluation of some currencies Icelandic crown, some Eastern Europe and Latin America currencies and increased currency volatility, The first symptoms of what is now called the late s recession ensued also in various countries and various industries.
The financial crisis, albeit not the only cause among other economic imbalances, was a factor by making borrowing and equity rising harder. Historical background of the current financial crisis: A financial crisis occurs when there is a disorderly contraction in money supply and wealth in an economy.
It is also known as a credit crunch. It occurs when participants in an economy lose confidence in having loans repaid by debtors. This causes lenders to limit further loans as well as recall existing loans.
As a result a relative small contraction in lending can lead to a dramatic contraction in money supply. The Great Depression occurred after a dramatic expansion in debt and money supply in the roaring twenties. The debt deflation theory coined by Irving Fisher formed the basis of the regulation subsequently introduced by Congress.
The Glass-Seagull Act was passed by Congress in order to prevent this occurring again. It was found that financial firms encouraged debt to be invested in the stock market which then overheated the stock market.
The act was designed to prevent this by separating the advising from the lending role of financial institutions. Financial firms could profit in the short term by simply setting up and lending on deals using others money.
A sequence of rapid debt expansion occurred including a dot-com bubble, which was followed by equity and housing bubble and then a commodity bubble. The Global financial crisis is the unwinding of the debt bubbles between What is financial crisis?
A situation in which the economy of a country experiences a sudden downturn brought on by a financial crisis. An economic crisis can take the form of a recession or a depression. Also called real economic crisis.
The term financial crisis is applied broadly to a variety of situations in which some financial institutions or assets suddenly lose a large part of their value. In the 19th and early 20th centuries, many financial crises were associated with banking panics, and many recessions coincided with these panics.
Other situations that are often called financial crises include stock market crashes and the bursting of other financial bubbles, currency crises, and sovereign defaults Sources of financial crisis: Strategic complementarily and Self-fulfilling prophecy.
It is often observed that successful investment requires each investor in a financial market to guess what other investors will do. For example, someone who thinks other investors want to buy lots of Japanese yen may expect the yen to rise in value, and therefore has an incentive to buy yen too.
Likewise, a depositor in Indy Mac Bank who expects other depositors to withdraw their funds may expect the bank to fail, and therefore has an incentive to withdraw too.
Economists call an incentive to mimic the strategies of others strategic complementarily. It has been argued that if people or firms have a sufficiently strong incentive to do the same thing they expect others to do, then self-fulfilling prophecies may occur.i FINANCIAL MARKET DEVELOPMENTS AND CHALLENGES IN BANGLADESH Dr.
Ahsan H. Mansur Policy Research Institute of Bangladesh Prepared as a Background paper for the Seventh Five Year Plan. The financial market in Bangladesh is mainly of following types: Money Market: The money market comprises banks and financial institutions as intermediaries, 20 of .
The Capital Market in Bangladesh: an overview on volatility and trends Introduction 1. Importance of Study Financial markets are facilitated through the flow of funds in order to finance investments by corporations, governments, and individuals. Financial Market; Regulators & Institutions; Financial market.
There are three types of financial markets in Bangladesh. They are: Money Market: Banks, Non-bank Financial Institutions, and Primary Dealers; Capital Market: Investment Banks, Credit Rating Companies, and Stock Exchanges; Foreign Exchange Market: Authorized Dealers.
A 'financial market' is a market in which people trade financial securities and derivatives such as futures and options at low transaction costs. Securities include stocks and bonds, and precious metals.
The money market in Bangladesh is regulated by Bangladesh Bank (BB).. The exchange rate is being determined in the market on the basis of market demand and supply forces of the respective currencies.