Emergence, Expansion and Contribution of Capital Market in Bangladesh: Internal Factor Analysis

Abstract

This paper assesses the emergence, expansion and contribution of stock market in Bangladesh based on Dhaka Stock Exchange (DSE) & Chittagong Stock Exchange (CSE). Capital market plays a significant role in the economy as a source of long term financing. But the existing status of the capital market in Bangladesh is hardly in a position to play in mobilizing the resources for economic development. Therefore, the country's capital market needs structural change as well as proper regulation, uses of accounting standard which are likely to improve the confidence of investors and boost the functions of capital market. The author evaluated the existing performance of the two bourses by applying KMO. The value of KMO greater than 0.50 to less than 0.70 represents the Mediocre, value of KMO greater than 0.70 represents the Good Performance, value of KMO greater than 0.80 represents the Very Good Performance. In this case, result shows that KMO reveals the sampling adequacy indicating i.e. 0.512 for Dhaka Stock Exchange (DSE) & 0.615 for Chittagong Stock Exchange (CSE) i.e. mediocre performance. The author identified the obstacles rising the capital market and analyzed the influential factors to overcome barriers as well as develop the capital market and also return the past recovering market capitalization in Bangladesh. The author also suggests the few recommendations to minimize the market crash.