The Impact of Capital Market in Economic Growth of Bangladesh


  • Tanveer Muhammad Al-Shams Lecturer, Finance, Asian University of Bangladesh, Dhaka, BANGLADESH
  • Aysha Ashraf Lecturer, Finance, Asian University of Bangladesh, Dhaka, BANGLADESH


Capital market, GDP, Shares, Economic Growth, Bangladesh.


This study examines the compel of the capital market on economic growth of Bangladesh between 2002 and 2012. The Data has been collected from Security Exchange Commission reports, Dhaka Stock Exchange Review Reports, and Central Bank of Bangladesh Statistical Bulletin respectively. From this study, we are able to know the different roles and functions played by the capital market. Moreover, this study showed the trends of some capital market exogenous variables like market capitalization, the all market share index, market value of transaction, number of deal and inflation over the last ten years. Ordinary lease square method of log-linear regression analysis was used to analyze the data. The result shows that the capital market has significantly impacted on the GDP. It is concluded that capital market in Bangladesh has the potential of growth inducing. The study recommends that the government should restore confidence to the market through regulatory authorities by ensuring transparency, fair trading transactions and improve the market capitalization by encouraging more foreign investors to participate in the market and also to increase investment instruments such as derivatives, convertibles, swap and option in the market.



A Golam Shahjarul, 2012, “Recent Trends in Capital Market in Bangladesh: Critical Evaluation of Regulation.”

Abdullah, M., Parvez, K., & Khaled, M. (2015). Is the Stock Market Overvalued: A Study in the Context of Bangladesh?. Asian Business Review, 1(1), 30-36.

Agarwal .2001. “Stock Market Growth and Economic Growth: Preliminary Evidence from African Countries.” Journal of Sustainable Development in Africa (JSDA)

Ahmed AA and Dey MM. 2011. Accounting Disclosure Scenario: An Empirical Study of the Banking Sector of Bangladesh Accounting & Management Information Systems, 9.

Ahmed AA and Neogy TK. 2009. Merger & Acquisitions (M&A) Goodwill Accounting: Principles and Practice The Bangladesh Accountant, 65, Oct-Dec.

Ahmed AA. 2012. Disclosure of Financial Reporting and Firm Structure as a Determinant: A Study on the Listed Companies of DSE ASA University Review, 6, 44-60.

Ahmed AA. In: Business Management (, ed. 2012. Compliance of Financial Disclosure: Long Walk to Accounting Research 1 Germany: LAP LAMBERT Academic Publishing.

Akter, F., & Rahman, A. (2015). The Growth Explains its Reasons Itself: From the Retrospect of Bangladesh Economy. Asian Business Review, 5(2), 54-59.

Al-faki M. (2006).The Nigerian capital market and socioeconomic development. A paper presented at the 4th distinguished Faculty of Social Science, Public Lectures, University of Benin, 9-16

Anyanwu JC 1998. Stock Market Development and Nigerian Economic Growth, Nigerian Financial Review, 7(2): 6-13.

Asfaw, H. (2014). Trade Policy and Economic Growth in Sub-Saharan Africa: A Panel Data Approach. American Journal Of Trade And Policy, 1(3), 94-101.

Awan, A. (2015). Shifting Global Economic Paradigm. Asian Business Review, 4(3), 35-40.

Chowdhury, M. (2015). Socio-Economic Impacts of Mobile Penetration in SAARC Countries with Special Emphasis on Bangladesh. Asian Business Review, 5(2), 66-71.

Demirguc Kunt A, Levin R 1996. Stock Market Development and Financial Intermediaries: Stylized Facts. The World Bank Economic Review, 10(2): 241-265.

Dr. Debapriya Bhattacharya, 2006, State of the Bangladesh Economy in FY 2006 And Outlook for FY 2007, Independent Review of Bangladesh’s Development (IRBD), Second Reading, 14-15

Equakun CO 2005. The Nigerian Capital Market: Impact on Economic Growth. Masters Thesis, Unpublished. Benin City the University of Benin.

Faruk, M. (2015). The Effect of FDI to Accelerate the Economic Growth of Bangladesh and Some Problems & Prospects of FDI. Asian Business Review, 2(2), 37-43.

Franco Modigliani and Richard Cohn, 1979, Inflation, Rational valuation, and the market, Finan. Analysis J., 35, 3-23.

Gebrehiwot, K. (2014). The Impact of Human Capital Development on Economic Growth in Ethiopia: Evidence from ARDL Approach to Co-Integration. American Journal Of Trade And Policy, 1(3), 125-134.

Greenwood, Jeremy, and Bruce Smith (1997). ‘Financial Markets in Development and the Development of Financial Markets,’ Journal of Economic Dynamics and Control, 21, 145-82.

Herring, R. and Chatusripitak, N. 2001. ‘The Case of Missing Market: The Bond Market and Why It Matters for Financial Development,’ Wharton Financial Institutions Centre working paper, University of Pennsylvania. 1-61.

Hossain, M. (2013). Leasing: An Alternative Financing Mechanism for SMEs. ABC Journal Of Advanced Research, 2(1), 66-82.

Huda, S. (2015). Intensifying of Stock Markets (DSE & CSE) in Bangladesh: An Experiment. Asian Business Review, 2(2), 44-50.

J. Abedin, Bangladesh Share and Capital Market, Antarip Publication, Dhaka, p. 22, 2008.

Jensen, Michael C, and Murphy, Kevin J. (1990). ‘Performance Pay and Top-Management Incentives," Journal of Political Economy, 98, 225-64.

John Mauldin, 2003, The Connection between Oil and Stock Prices, FLT Dec. Edition.

K. A. R. Islam, “The prospects, possibilities and challenges of Bangladesh capital market”, The Financial Express, Home Page, Dhaka, Thrusday, December 20, 2007

Kenneth E. Homa & Dwight M. Jaffee, 1971, The supply of money and common stock prices, Journal of Finance, 26, 1045-1066

Levine R, Zervos S 1996. Stock Market Development and Long-run Growth. The World Bank Economic Review, 10(3): 323 – 339.

Levine R, Zervos S 1998. Stock Market Development and Long–run Growth. American Economic Review, 88(3): 537- 558.

Levine, Ross, and Zervoss, Sara. (1998). ‘Stock Markets, Banks and Economic Growth.’ American Economic Review 88, 537-38.

M. K. Mujeri, and M. H. Rahman, “Financing Long-Term Investments in Bangladesh: Capital Market Development Issues”, Paper provided by in its series Working Papers with number id: 2060, 2009.


Mondal, M., Akter, N., & Kamal, M. (2013). Investors’ Perception for Transforming Traditional Stock Market into Islamic Stock Market: An Empirical Study on Dhaka Stock Exchange. ABC Journal Of Advanced Research, 2(2), 18-29.

Mwigeka, S. (2015). Do Budget Deficit Crowds out Private Investment: A Case of Tanzanian Economy. American Journal Of Trade And Policy, 2(1), 11-18.

Nyong MO 1997. Capital Market Development and Long-run Economic Growth: Theory, Evidence and Analysis, First Bank Review, December pp. 13-38.

Ogunyomi, O., Daisi, O., & Oluwashikemi, R. (2013). Economic Globalization, Income Inequality and Economic Growth in Nigeria: A Static Data Analysis (1986-2010). ABC Journal Of Advanced Research, 2(2), 55-68.

Osaze BE 2000.The Nigeria Capital Market in the African and Global Financial System. Benin City: Bofic Consults Group Limited.

Oyejide TA 1994. The Financial System and Economic Growth in the Context of Political Transition. Central Bank of Nigeria Economic and Financial Review, 32(3): 260-267.

Rahman, M., & Ahsan, M. (2015). Foreign Direct Investment as an Instrument for promoting Economic Development in Bangladesh. Asian Business Review, 3(4), 100-107.

S.M. Solaiman, “Recent Reforms and the Development of the Securities Market in Bangladesh“, Journal of Asian and African Studies, Vol. 41, No. 3, pp. 195-228, 2006.





Original Research Article