Introduction

Stock market plays a significant role in economic expansion of any country. Investors of
different levels join here for investing their funds. But uncertainty and risks always prevail in the
third worlds stock market especially in Bangladesh that has experienced two big crashes in 1996
and in 2010. Stock market crash means an extreme and surprising decline of stock market prices
for a short period of time which makes market participants panicked and causes significant
investment losses to investors. There was a big bubble in 1996 followed by a disastrous crash.
The index point of Dhaka Stock Exchange (DSE) jumped from about 800 points in June 1996 to
around 3,600 points in November 1996After that, the index began to fall. A large number of
investors left the market with huge profit, leaving the small investors in the situation of price fall
with many losing their capital. A negative impression was created in the mind of investors due to
the crash of 1996. However, the crash also led to effective developments such as the introduction
of electronic trading in August 1998, the establishment and incorporation of the Central
Depository Bangladesh Ltd (CDBL) as a public limited company in August 2000, and the
incorporation of the Central Depository System (CDS) as an independent company in January
2004. The market witnessed another severe session of decline in 2010 that resulted in wiping out
even the initial capital investment made by thousands of wretched and ill-fated investors. Around
3.3 million investors of Bangladesh were said to be engaged in the stock market during the
market crash of 2010.The aftershocks from the market crash of late 2010 continued to be felt
with the index point falling 3,032 points in 2011 and a further 1,038 points in 2012. Several
problems have been identified behind this crash such as inadequate systems and observation,
cracks in legal and supervisory framework, fragile implementation capacity, absence of
professional standards for licensing, absence of demutualization and strong corporate governance
etc. The aim of this report is to analyze the initiatives taken by government and their impact on
stock market improvement.

Literature Review
A number of research have been conducted around the world regarding stock market, stock
market crash and stock market return. Mishkin (2001) stated that a well-established, managed
and organized stock market brings investment opportunities in the country by implementing the
productive projects that ultimately results in the economic activity, mobilizing savings,
diversifying risks and allocating effective capital. Stock market quickens economic progress by
enhancing proper utilization of domestic and foreign resources and smoothing investment. The
stock market contributes to economic development as it facilitates equity finance , spreads
ownership among a large set of investors and thus mobilize the saving of the population ,
provides a mechanism for allocating capital to productive use and facilitates a link between the
capital markets of a particular country and the markets of the industrial world (Ryrie, 1991).
According to Mishkin and White (2002), stock markets infrequently experience strong and
sudden fall of prices, which may take place after a period of strong stock price increases. Their
study concluded that the key reasons behind the stock market crash are illogical market behavior,
failure of regulatory authority to supervise the market suitably, excessive liquidity in the market,
defective listing system, issuance of right shares and preference shares at high price, stock
manipulations by insider trading, lack of knowledge of the investors about the market, avoidance
of company basics by the investors and excessive greed of investors to make profit in short
duration of times. Other factors like economic situation, reduction of investment in other sectors,
unemployment situation of the country and finally the encouragement of regulators for
investment in stock market also played important role for unusual growth of stock market (Ullah
and Kabir, 2012). Securities market development vary from country to country depending on
nature of regulatory mechanisms, economic policies, as well as institutional structures.
Recovery was initiated with Institutional buyer for instance merchant banks, state owned banks
& non-financial institutions. (Chowdhury2011). Several new regulatory frameworks are in
place, merchant bankers and analysts have redoubled efforts to persuade multinationals to come
to the market. At the Bangladesh Capital Market Expo 2015, Commerce Minster Mr. Tofail
Ahmed, urged the BSEC to prepare a comprehensive plan of action to list multinational
companies in Bangladesh. Very encouragingly for the market, the Minster said, Multinational
companies like Unilever and Nestle should come to the market, and the regulator should make a
comprehensive plan of action to bring in more such firms. Steps towards actualizing this would
enable long-term growth for the market.
Some other regulatory changes such as reforming income year for all companies, immediate
disclosure of price sensitive information, approving small- cap firms to raise funds, new
guidelines to issue commercial paper, eased rules for banks capital market exposure etc. are
taken by BSEC and Bangladesh Bank.

Objectives of the study

The objectives of the study are:
To find out the reforming strategies taken to improve Bangladesh stock market after crash 2010.
To analyze the impact of reforming strategies on the performance of stock exchanges.