Academic literature on the topic 'Financial crises – Bangladesh'

In perspective of the economic vulnerability faced by banks in financial sector, this study mirrors the methodology used by Shumway (2001) – the dynamic hazard model that is able to forecast systemic risk in financial market arena. Here, the terminology followed is based on the CAMELS framework variables: capital adequacy, asset, management, earnings, liquidity and sensitivity to market risk. The objective of this study is to construct a macroprudential indicator (MPI) for the case of Bangladeshi financial market. The result will then be tested for robustness with macro-stress test. Lagged independent variables will be used in the simple hazard model to allow early prediction of MPI in the year in which the crisis happens. The empirical findings can be used as a guideline for the Bangladesh Government and policy makers in accessing, examining and forecasting the health of the Bangladeshi financial system and formulate suitable financial system policies for control. MPI generates information about systemic risk allowing the detection of potential economic crises functioning as an early warning indicator. Government and policy makers will be able to make early preparation in cushioning any potential crises by means of the MPI. Thus the impact of the crises could be minimized and eventually reduce its impact on the Bangladesh economy. The specific objectives are to assemble a novel MPI that is able to recommend early signals of financial market vulnerability, to identify the MPI turning points and establish a comprehensive reference chronology for Bangladeshi financial market and to evaluate the predictive performance of newly constructed MPI on characterizing Bangladeshi financial sector.

Recently the performance of banking industry is one of the much talked issues in the history of Bangladesh. Predicting the factors of financial crises in banks is very much important as this sector is facing a crises moment now. This study examined the driving factors of financial crises in banking sector using panel data consisted of five year observations (2012-2016) for each of 28 PCBs listed in Dhaka Stock Exchange (DSE) and 6 State-Owned Commercial Banks (SCBs). Financial crisis is measured by Altman’s Z-score and Pooled Ordinary Least Square (Pooled OLS) has been applied to find out the factors necessary to condense financial crisis in banks.The study found that SCBs and listed PCBs in Bangladesh are facing financial crisis on the basis of Altman’s Z-score model. Results of the analysis postulated that CRAR, NIIR and NINTR significantly contribute to lessen financial crisis in listed PCBs and also in SCBs. Therefore, the study suggests the regulatory authorities, including stakeholders and researchers to taking into account the findings of the study and to be more alert of the operations of SCBs and PCBs in order to steps forward the performance of this sector as well development of the country in the coming future.

This aim of the article is to establish a model to discuss the reasons for changing the level of credit risk among the commercial banks of Bangladesh during the global financial crisis (GFC). Credit risk has been remaining as the essential and core risk in commercial banking activities. Multiple regression analysis is used to test the relationship among the level of credit risk as a dependent variable and financial crisis, other bank-level variables and macroeconomic variables. The causes of the GFC revealed not only systematic or structural imbalances but also the necessity to keep and strengthen the principles of credit risk management. We analyse the leading causes of the recent GFC. Moreover, the lessons that must be learnt from the weaknesses of credit risk management systems. Credit risk was found to respond to macroeconomic conditions, which indicate strong feedback effects from the banking system to the real economy. This article represents the analysis of the influence of the financial crisis on credit risk management in commercial banks and summarizes the challenges faced by banks for credit risk improvement. We hope that this reality creates new opportunities for managing credit risk in the future to increase this importance in the banks and the overall economy of Bangladesh.

This study investigates the contagion and globalization between the South Asian (Pakistan, India, Bangladesh and Sri Lanka) and five largest economies (US, UK, China, Japan and Germany) stock markets. Daily stock returns data from 1st July 1997 to 30th June 2015 consisting of total 4695 observation is analyzed. DCC GARCH is applied to calculate the conditional correlation coefficients to overcome the issue of heteroscedasticity. Null hypothesis of no globalization got rejected eleven times out of twenty while the hypothesis of no contagion got rejected six times. Further analysis of conditional correlation coefficients confirmed the impact of 9/11 attacks, Subprime mortgage crises and Europeans debt crises on the Indian market. Impact of 9/11 attacks also found on Pakistani and Sri Lankan stock exchanges, while Dhaka stock exchange remained independent of all shocks. In sum, the South Asian stock markets remained isolated from the global shocks except India. Isolation of South Asian stock markets from the global shocks is due to their lower integration with the global markets. This study provides some useful recommendations to the investors and policy makers. Results suggests that Indian stock exchange get contagion impact from the major economies, so authorities of India should have to take measure to decouple the market from the global shocks. The markets of Bangladesh, Sri Lanka and Pakistan are not properly integrated with global financial system, so the authorities of these countries should have to take proper steps to liberalize the markets. This paper presents the first empirical study on financial contagion and globalization of South Asian countries.

PurposeThe purpose of this study is to critically analyze the Financial Compensation Funds being accumulated by Islamic Banks of Bangladesh in credit-based transactions. In this connection, due to the evolved liquidity crisis amidst the COVID-19, industry opinions are observed that suggest including the compensations or the donation funds directly into the bank's income account. But the Sharīʿah does not permit it. Such alternative proposals of using compensation or donation fund during crises are scrutinized under Sharīʿah principles to come to a logical conclusion.Design/methodology/approachThe approach followed in the study is textual and discourse analysis through descriptions of ideal Sharīʿah-compliant methods for handling late payment of credit and comparison with the industry practices.FindingsIt is observed that there are conceptual gaps in the industry as is reflected in the Islamic Banking Guideline of Bangladesh. The funds collected from the debtor due to late payment are named as compensation (Ta‘wīḍ) whereas the nature of the transaction is a donation (Tabarru'). The misconception can lead to various Sharīʿah non-compliant activities later with the funds. The proposals brought out in the industry to use such compensation/donation funds during a crisis are a consequence of this. The proposals of using such funds for banks' purposes in any situation are not supported by Sharīʿah principles and are against the Islamic banking philosophy.Originality/valueThe study is very relevant to the current crisis of COVID-19 in the domestic Islamic Banking Industry and also instrumental for the future guidance to stick to the Sharīʿah principles in managing compensation or donation funds by the Islamic Banks.

Corporate governance has a positive impact on firm performance. Financial flexible firms are a better performer when there are financial constraints as well as financial crises. However, what motivates financial flexibility is a dearth research area in the existing finance literature. The objectives of this research are to investigate the relationship between corporate governance and financial flexibility; how corporate governance influence financial flexibility; and, what factors of corporate governance are dominant to influence financial flexibility. To pursue the research objectives we chose Cement Industry of Bangladesh as a case. We consider liquidity, Internal Funds and Unused debt capacity as the proxy of financial flexibility and Ownership Concentration, Board Size, Board Independence as Corporate Governance variables and Firm Size, Market to Book Ratio, Debt Capacity, Financial Constraints and Firm Age as control variable to estimate the relationship between corporate governance and financial flexibility. This study evidences that Board Structure has no significant influence on firms’ cash holding(Liquidity).However, Firms Age and Market to Book Value have a significant influence on firms' cash position. This study also finds that Ownership Structure has no positive impact on Firms' Unused Debt Capacity but Financial Constraints and Market to Book Value have a positive significant impact on firms' unused debt capacity. However, Firm Size has a positive relationship with Internal Funds.

The objective of the study is to show the remedial effect of bank liquidity risk in the marketplace by disseminating financial information and practicing corporate governance mechanisms. The link between financial disclosure, corporate governance, and banks' liquidity risk management in Bangladesh is examined in this paper. The study used panel data on 32 commercial banks from the 2008 to 2018 with 346 observations collected from published annual reports. Based on the preliminary diagnosis, the study chose the two-stage least squares (2SLS) regression method to minimize the errors arising from heteroskedasticity, autocorrelation, and endogeneity issues. The study found that adequate financial disclosure and corporate governance practices minimize bank liquidity risk to maintain a stable image in the minds of investors and withstand immense regulatory pressure. To allow banks to detect issues early, they must implement changes quickly and be more robust to crises, thus risk management efficacy and excellent corporate governance implementation are required. Moreover, banks are mainly concerned about liquidity risk as it directly affects the market's performance and stability. Liquidity crises can be eradicated by proper monitoring and providing information pertaining to risks to prudent investors in a reliable and transparent corporate culture.

Financial institutions and banks are required to follow mechanisms to monitor the positions and create stimulas for sensible risk-taking by divisions a well as individuals. Risk measurement comprises of the quantification of risk exposures, whereas risk management demonstrates to the overall procedures by which managers fulfill these needs to identify the risks and recognise the category of the risks it faces. This research targerts on the economic instability faced by banks in financial arena in terms of the crises affairs in regard of economic distress. Here, the methodology followed is based on the CAMELS framework variables. CAMELS is a short form stands for: capital adequacy (C), asset (A), management (M), earnings (E), liquidity (L) and sensitivity to market risk (S). Based on these nomenclature, a couple of variables should be selected, such as capital asset ratio, cost income ratio, non-performing loan, non-interest income as component series and return on asset (ROA) as the reference series to identify turning points of economic volatility in banking sector of Bangladesh. Thus, by forecasting the directional deviations it could make financial policymakers aware of the changes at early stage in financial markets and banking industry and privilege them to undertake precautionary steps for preventive purposes. The constructed MPI should have a incredible lead time of about 5 to 7 months on an average in case of prediction against leading for the reference series. By renovating financial efficacy of venture banks, Bangladesh also should recover their subsequent banking system to execute these suggestions.

Background The COVID-19 lockdown, the advent of working from home, and other unprecedent events have resulted in multilayer and multidimensional impacts on our personal, social, and occupational lives. Mental health conditions are deteriorating, financial crises are increasing in prevalence, and the need to stay at home has resulted in the increased prevalence of domestic violence. In Bangladesh, where domestic violence is already prevalent, the lockdown period and stay-at-home orders could result in more opportunities and increased scope for perpetrators of domestic violence. Objective In this study, we aimed to determine the prevalence and pattern of domestic violence during the initial COVID-19 lockdown period in Bangladesh and the perceptions of domestic violence survivors with regard to mental health care. Methods We conducted this cross-sectional web-based study among the Bangladeshi population and used a semistructured self-reported questionnaire to understand the patterns of domestic violence and perceptions on mental health care from August to September 2020. The questionnaire was disseminated on different organizational websites and social media pages (ie, those of organizations that provide mental health and domestic violence services). Data were analyzed by using IBM SPSS (version 22.0; IBM Corporation). Results We found that 36.8% (50/136) of respondents had faced domestic violence at some point in their lives; psychological abuse was the most common type of violence. However, the prevalence of the economical abuse domestic violence type increased after the COVID-19 lockdown was enforced. Although 96.3% (102/136) of the participants believed that domestic violence survivors need mental health support, only 25% (34/136) of the respondents had an idea about the mental health services that are available for domestic violence survivors in Bangladesh and how and where they could avail mental health services. Conclusions Domestic violence is one of the most well-known stressors that have direct impacts on physical and mental health. However, the burden of domestic violence is often underreported, and its impact on mental health is neglected in Bangladesh. The burden of this problem has increased during the COVID-19 crisis, and the cry for mental health support is obvious in the country. However, it is necessary to provide information about available support services; telepsychiatry can be good option for providing immediate mental health support in a convenient and cost-effective manner.

Abstract For risk and capital measurement, banks and other financial institutions need to meet forthcoming regulatory requirements. However, it is a serious issue to think that meeting regulatory requirements is the sole or even the most important reason for establishing a scientific, sound risk management system. To direct capital to activities with the best risk/reward ratios, managers need reliable risk measures. To stay within the limits imposed by readily available liquidity, by creditors, customers, and regulators, they need estimates of the size of potential losses. They need mechanisms to monitor positions and create incentives for prudent risk-taking by divisions and individuals. Risk measurement deals with the quantification of risk exposures, whereas risk management refers to the overall process by which managers satisfy these needs and follows to define a business strategy, to detect the risks to which are visible, quantifying those risks, and to control and understand the nature of the risks it faces. This research focuses on the economic vulnerability faced by banks in the financial sector in terms of the crises issues perspective of economic distress. Here, the methodology followed is based on the CAMELS framework variables. CAMELS is an abbreviation for: capital adequacy (C), asset (A), management (M), earnings (E), liquidity (L) and sensitivity to market risk (S). Based on these terminologies, a couple of variables should be selected, such as capital asset ratio, non-performing loan, cost income ratio, industry production index, non-interest income, reserve of gold, inflation, stock turnover ratio, real interest rate as component series and return on equity (RoE) as reference series to identify the turning points of economic vulnerability in the banking sector in Bangladesh. Thus, by forecasting the directional changes it could make policymakers aware of changes in the financial markets and banking economy and allow them to undertake preventive steps for remedial purposes. The constructed MPI should have a remarkable lead time of about not less than 6 months on average in case of prediction against the leading for reference Series.By mending the financial efficacy of investment banks. Bangladesh also should improve their corresponding banking system to implement these suggestions.

The COVID-19 pandemic has created devastating consequences for all businesses globally, including the small businesses in Bangladesh. The small business sector in Bangladesh is a key driver of its economic growth and has been hit particularly hard by the pandemic due to its pre-existing vulnerabilities and lower resilience to crisis. This chapter investigates the impact of COVID-19 on small-scale businesses, their subsequent response measures, and learning experiences that have created a route to resilience. A qualitative investigation on six small-scale enterprises across manufacturing and service areas was included in the study. The cases covered fashion and clothing and organic food and beverage businesses. The findings of the study suggest that the impacts of the pandemic are primarily financial, operational and supply chain, and logistical in nature. The policymakers need to take urgent measures to ensure the sustainability of this sector amid the ongoing pandemic.

Traditional auditing has failed to control the jeopardy of increased financial frauds. Gradually, forensic auditing has been employed by organizations to control such frauds. Nonetheless, there is a dearth of studies examining the effects of forensic auditing on financial frauds. In particular, the impact of forensic auditing on financial frauds in Bangladesh is not examined. This study attempts to fill this gap. Using survey data of 182 respondents, this study applied logistic regression analysis. Findings indicate that forensic auditing has significant positive effects on the detection and prevention of financial fraud occurrences in the banking sector of Bangladesh. Findings also indicate that forensic auditing is competent to diminish financial frauds. Therefore, it is recommended to adopt forensic auditing in the banking sector of Bangladesh.

COVID-19 has enforced work from home (WFH) in all the sectors to continue their operations; university education is not an exception. Both the public and the private universities of Bangladesh have to adopt online teaching to reduce academic loss. As teaching from home (TFH) is a new work arrangement for the teachers, this chapter explores their experiences. Different challenges regarding teaching and research activities, work-life balance, financial condition, and physical and mental state have been identified from in-depth interviews with 30 teachers from both types of universities. Some positive experiences have also been found, which indicates that the effect of TFH depends on variables like age, gender, marital status, number of dependents, and the type of university. The findings of this study provide a lens to look at the prospect of TFH for future use.

The education sector in Bangladesh has been affected severely by the COVID-19 pandemic crisis like many other countries around the globe. Both the public and private universities faced different types of challenges to continue the teaching-learning process during this time. The chapter has explored these challenges and mitigation strategies based on quantitative and qualitative studies with undergraduate and graduate students of public and private universities. The study has covered both public and privately owned general and engineering universities to explore more specific issues and directives. Moreover, in-depth interviews were conducted with teachers to learn the problems they faced and subsequent strategies to cope with the challenges to minimize these challenges and educational loss. The study identified the infrastructural, technical, psychological, health, educational policy, and financial-related challenges faced by key stakeholders. The study incorporated directives to overcome these challenges and provide guidelines for policymakers at home and abroad.

Information and communications technologies (ICTs) are playing an increasingly vital role in the daily lives of all communities by revolutionizing their working procedures and rules of governance. ICTs offer a unique opportunity for governing elite to overcome the crisis of representative democracy, as ICT and the Internet empower civil society to play its role more effectively and facilitate the performance of governments’ main function-serving the people who elect them (Misnikov, 2003). In the realm of government, ICT applications are promising to enhance the delivery of public goods and services to common people not only by improving the process and management of government, but also by redefining the age-old traditional concepts. Community networking groups and local government authorities are well placed to campaign for greater inclusion for all members of the community in the information society. Possible areas to target include the provision of technology at low or no cost to groups through community technology centres or out of hours school access. There are many possibilities and local government must take a significant role in these activities (Young, 2000). Information society is based on the effective use and easy access of information and knowledge, while ICT for development (or ICTD) is not restricted to technology itself but focusing on manifold development and diverse manifestations for the people to improve their well-being. ICTD has deep roots in governance, is part of governance and has effects on governance patters and practices at both central and local level. By recognizing these facts, UNDP focuses on technologies to end poverty at WSIS Cyber Summit 2003, and emphasizes on ways that new technologies can help lift more than one billion people out of extreme poverty (UNDP, 2003). Apart from the four Asian IT giants (Korea, Rep., Hong Kong, China, Taiwan, China, and Japan), most of the Asian countries have fallen under the “low access” category of the Digital Access Index. This has also been referred in the WSIS Cyber Summit 2003, until now, limited infrastructure has often been regarded as the main barrier to bridging the digital divide (ITU, 2003). Among the countries with ICT spending as share of their GDP, Sweden, UK, The Netherlands, Denmark, and France (8.63, 7.97, 7.39, 7.19, and 6.57% respectively during 1992-2001) remain at the top (Daveri, 2002, p. 9), while countries like Bangladesh, Greece, Mexico, Niger, and many more remain at the bottom (EC, 2001; ITU, 2003b; Miller, 2001; Piatkowski, 2002). In a similar research it has been found that in terms of average share of ICT spending GDP, New Zealand, Sweden, Australia, USA, and UK (9.3, 8.4, 8.1, 8.1, and 7.8% respectively during 1992-1999) were among the highest (Pohjola, 2002, p. 7), though most of the countries in the Asian and African regions remain below the average of 5%. The disadvantaged communities in the countries staying below average in ICT spending seem to be lagging in forming appropriate information-based economy and eventually fall behind in achieving proper e-government system. The e-government system in those countries need to enhance access to and delivery of government services to benefit people, help strengthen government’s drive toward effective governance and increased transparency, and better management of the country’s social and economic resources for development. The key to e-government is the establishment of a long-term dynamic strategy to fulfill the citizen needs by transforming internal operations. E-government should result in the efficiency and swift delivery and services to citizens, business, government employees and agencies. For citizens and businesses, e-government seems the simplification of procedures and streamlining of different approval processes, while for government employees and agencies, it means the facilitation of cross-agency coordination and collaboration to ensure appropriate and timely decision-making. Thus, e-government demands transformation of government procedures and redefining the process of working with people and activities relating to people. The outcome would be a societal, organizational, and technological change for the government and to its people, with IT as an enabling factor. E-government should concentrate on more efficient delivery of public services, better management of financial, human and public resources and goods at all levels of government, in particular at local level, under conditions of sustainability, participation, interoperability, increased effectiveness and transparency (EU, 2002). ICT brings pertinent sides more closely by prioritizing partnerships between the state, business and civil society. A few East European countries have became economically liberal with the high level of foreign direct investment per capita and at the same time became ICT-advanced regional leaders in terms of economic reform. These countries also present the region’s most vivid examples of partnerships and collaboration. They have clearly manifested the importance of the public-private partnerships, transparent bottom-up strategies, involvement of all stakeholders, total governmental support, capturing economic opportunities, and enabling electronic mediated businesses, responding to the challenges of globalization.