Abstract:
Investments in capital markets is one of the important long-term factors for a country like Bangladesh to achieve a higher rate of industrialization and growth. An efficient and healthy capital market is important in mobilizing increased capital flows and maintaining the stability of the financial system. Traditionally, trends have linked bubbles and recessions to stock price dislocations. Despite the cautious regulatory setup, bubbles and bankruptcies can be universally associated with stock markets around the world. In addition, the stress level of retail investors is also a crucial factor when talking about bubbles and recessions. Bubbles and defaults are common features of capital markets in both developed and developing countries. Typically, a boom is fueled by a rapid expansion of credit to the private sector accompanied by increases in commodity prices and stock market indices. A recession, on the other hand, leads to the dramatic reductions in investment and consumption that a recession can bring. And to deal with these issues and obstacles of such magnitude there is always a long-term effect of a lack of investors in both retail and institutional sectors. And to ensure that such a situation does not occur in their own spheres all these developed capital markets underwent a significant digital transformation, which not only ensured more trade and investments but also made sure that people of any class, age or profession have similar ease of access to the capital market. Like other countries, Bangladesh stock market also experienced boom and bust in 1996 and after the rise of capital market in the 2009-11 era, the post pandemic and Russia-Ukraine war difficulties have presently put quite a pressure in the global capital market. Endogenous and exogenous shocks can lead to collapse. With ever stronger links to global financial markets, exogenous shocks such as the recent global fiscal crisis (the subprime mortgage crisis from 2008 to 2010) have had a significant negative impact on stock markets around the world. However, as the Bangladesh stock market has little exposure to the rest of the world, the impact of the global financial crisis on the Bangladesh stock market has been limited.
