Capital Market Failure

Tanay Kumar Roy, ZR 60 Tahseen Zulfiquar, ZR 88 Mahmudul Hasan, ZR 90 Radi Shafiq, ZR 54 (irregular, BBA 17th)

Overview of the Market Failure

The Was in turbulence throughout 2009 Upturn Market was heavily aided by the entrance of
Grameenphone The index rose by 22% over a single day on November 16, 2009 Continued to be turbulent throughout 2010 Second highest among the stock markets of the world with a gain of 49.37%.

Source: http://seekingalpha.com/article/223816-2010-country-stock-market-performance

Overview of the Market Failure

The Market falling once on December 13 by 285 points collapse Over 3% of the DGEN Index which stood at around 8,500

points On December 19, with the index falling a further 551 points, or about 7% Was the largest fall in the 55 year history of the Exchange Within December 2010 and January 2011, the DGEN index fell from 8,500 by 1,800 points The market fell by 5% on June 12, before taking a 4% plunge on October 11 Stood at around 5,500 index points in October 2011 from 8,900

Source: http://www.stockbangladesh.com

Reasons of the Capital Market Failure

Gambling and Scam
Greed and Impulsive Decision by General Investors

Increased Amount of Margin Loan

Faulty Measurement of General Index

Reasons of the Capital Market Failure

Manipulating Book Building Method Policy of Bangladesh Bank Lack of Monitoring by SEC

Impacts of Failure Economic Impact

Decrease in Stock Prices Liquidity Crisis

Rise of Interest Rate

Decrease in Tax

Loan Default

Closing down of securities

Impacts of Failure
Social and Psychological Impact

Movement
SEC (Investment Adviser) Rules, 2012

Depression and Suicide Tendency

SEC (Research Analysis) Rules, 2012

Financial Reporting Act

Solutions
Facilitate growth in product market

Stopping trading through Omnibus Accounts

Determining Share prices based on Fundamentals and encouraging research

Solutions
Including TIN Number with BO account & Stop Investing Black Money

Minimum Margin Loan

Increasing mutual funds & entry barrier for investors

THANK YOU!