Banking in Bangladesh After Independence of Bangladesh the banking sector was restructured as a fall out of war of liberation. Banking grew primarily in the public sector with main emphasis development needs of the war-torn economy. With gradual liberalization in subsequent years, it was increasingly felt that banks should be allowed in the private sector for giving a fillip to development process on the basis of private initiative. In the 80's for the first time a number of banks in the private sector was allowed. Subsequently in the mid 90's some more banks in private sector commenced operations. In 1999. 3rd Generation of private sector banks was given permission to operate. Finally in 2001 4th Generation of private sector banks commenced operation. As a result while up to 80's financial sector was dominated by public sector banks, banks in the private sector were given increased responsibility with the passage of time. The share of deposits of Nationalised Commercial Banks (NCBs) in total deposits which stood at 89% in 1980 gradually declined over years to reach the level of 55% in 2000. Simultaneously, Private Commercial Banks (PCBs) which were responsible for only 18% of deposits in 1985 this share increased gradually over the years to constitute abort one third - 1 - of the total deposits of the country by the end of the millennium. But market share of deposits of FCBs did not change much during the last twenty years. In the early 80's the share was 6% and it stood at 7% by the end of the century with a relatively small branch network in the country. Likewise share of NCBs in total advances of the country declined gradually from 80% in 1980 to reach the level of 47% by the end of year 2000. At the same time, share in advances of the PCBs increased from 14% to 31% over the same period. A break-up of deposits and advances indicates that share of rural branches contribute higher share of deposits than their share in advances. Rural deposits constitute slightly more than one-fifth of total deposits of the banks. On the other hand, rural advances constitute around 17% of the total advances of the banking sector. This scenario leads some analysts to conclude that there has been a continuous siphoning of resources from rural to urban areas. While - 2 - apparently this may seem to be a reason for a serious concern, the real picture is somewhat different if an in-depth analysis is made.
The profit oriented industry of private UCB banking, patients are considered as consumers, and consumer behavior entails considerable risks and requires prudent decision making due to uncertainty of the outcome. The theory of perceived risk was first introduced by Bauer (1960), in the field of consumer behavior. Since 1960 (Bauer, R.A. & D.F. Cox 1967) this theory was considerably applied in many studies and the impact of perceived risk and consumer behavior has been affirmed globally. The more risk they perceive, the less likely they pay for UCB banking.
The market of Jones Blair can be divided to two groups: Dallas-Fort Worth area and Non Dallas-Fort Worth. Among these two areas, we have got the contractor, professional painter and DIY household but the number of contractor is so minimal so we do not focus on this. From the case, we can get the estimated dollar volume of architectural paint and allied products sold in Jones Blair’s 50 countries service area in 1995 was $80 millions; 40% of its outlets are located in the 11-country DFW area and the remaining are in the other 39 countries. So, the estimated dollar volume for the DFW area is $48 millions and for the non-DFW area is $32 millions. Besides, 70% of its sales through the DFW dealers went to the professional painter, while 70% of sales through the non-DFW outlets went to DIY. It means the percentage of the market segment is as following:
This chapter covers the overview of the country in a short history, banking system, commercial banks and interest rate theory. The chapter provides also the theoretical review of interest rate and profitability.
1972 HBL opened the first of 11 branches in Oman. HBL constructed Habib Bank Plaza in Karachi to commemorate the bank’s 25th Anniversary.
It is interesting to note that during the period of 1913 to 1917; almost 87 banks in India succumbed to a financial crisis. However, the Bank of Baroda survived the economic depression by dint of its financial integrity, business prudence and concern uncompromising concern about its customers and clients. This has transcended down to the present ages and has become the motto of the
(d) As a development advocate: These banks also help in promoting the ‘business of development’ such as job generation, domestic resource mobilization, countryside development, urban renewal, etc.
In the post-colonial context , there is a desire to change the current currency system to improve the management of money and credit ; and to foster a favorable climate for the development of domestic enterprises in which the World Bank proposed the establishment of the National bank of each country . A National bank is seen as a tool of control of financial freedom , which no political independence would not be complete . Therefore, Sir Sydney Caine , former Vice Chancellor of University of Malaya , and Mr. GM Watson , an executive of the Bank of England , has been appointed to carry out a detailed investigation on problems of central banking and to provide advice on the establishment of a center in Malaya , including law rules.
. Rao (2008) in his study on rural credit has discussed some of the lively issues of rural credit in India, that are; the increasing substitution of capital for labour in agriculture due to diversion of cheap credit for bigger farmers by commercial banks, significant slowing down in the share of the short-term loans in relation to the share of fertilizers in the eastern and western states despite
Banking is a process that is involved in many ways with the business and trade. There are different types of banking in the present world. Two major types are the Conventional Banking and the Islamic Banking. Both of the banking systems are playing very important roles in the trade and business. The focus in this discussion is an evaluation about these two banking system. The chapters will address important bank characteristics that will be included in the regression models. The Ordinary Least Square method will be used to identify how bank characteristics impact bank profitability. The adopted methodology examines the sensitivity of internal bank characteristics on profitability indicators. The profitability study is conducted on Islamic banking system and is compared to conventional banking system. The discussion begins with a literature review and moves on to the critical evaluation and analysis, variable definition, model, and data variables, advantages, disadvantages, points agreed with, points disagreed, reasons, and evidence.
The main function of a bank is to take in funds from surplus units, whom are persons that have excess funds (depositors) and lend to deficit units, whom are persons who are in need of funds to finance a need (borrowers).The main reason for a bank to lend is to make a profit. Banks take in deposits and in turn pay interest on these deposits. A bank is unable to pay interest if they do not have a source of income or a way of making a profit. Apart from paying interest, a bank has a demand to staff, shareholders and society. When lending funds the bank pose a risk of not only interest payable but also losing the depositors original funds. Therefore, the lending process is a critical decision amongst lenders due to the risk involved.
Financial institution development plays a crucial role on the economy. According to the (Porter, 1966), the author shows that the level of financial institution development is the best benchmark of common economic development. And (Arellano and Bond, 1991) also found that financial institution in particular banks act as intermediaries between supply of savings and demand for loans will straightly influence the local and national economic development. Policymakers should bear in mind that the importance role of banks. Financial sector intensifying and sophistication is significant to the growth creation process even if they are comparatively big and liberalized (McKinnon, 1973) and (Shaw, 1973). (Dehejia and Lleras-Muney, 2003) indicate that a well-functioning banking system is able to improve economic growth. However, based on the studies of (Cetorelli and Gambera, 2001), there are negative relationship between the overall effect of bank concentration on the macroeconomic performance if industrial sectors are more requiring external financing for its growth rate especially younger firms are encouraging credit for their business. Nonetheless, if more dependent on external finance, bank concentration can enhance the growing of industries (Cetorelli and Gambera, 2001). A tighter restriction on non-traditional bank activities or bank ownership of non-financing companies is one of the solutions to decrease the negative effect of bank concentration on economic growth.
Contributing to its high growth are many critical sectors, amongst which ‘financial services sector’ is unarguably one of the most distinguished sectors of Indian economy. The role of financial sector in shaping fortunes for Indian economy has been even more critical, as India since independence lacked prowess of a resilient industrial sector. This prompted India to depend on other sectors for its sustenance. These other sectors mostly constituted of ‘financial service sector and ‘agricultural sector’. India’s watershed decision to nationalise 14 commercial banks in 1969 validated how critical was ‘financial sector’. Its importance after economic reforms of 1992 has grown only manifolds to the extent that today it presently contributes to over 6% of India’s GDP. Dynamic growth of financial services sector during post reform age has helped it in assuming such an important place in the economy of India. Unlike in past when financial services sector mainly constituted of banking sector, today financial sector has broaden its reach to include sectors like insurance services, non-banking financial services, co-operatives, pension funds, mutual funds, capital markets etc. especially employment generated by banking and insurance sector every year runs in millions with improved availability of credit, the Indian economy during past two decades has managed to march towards higher economic growth.
It is a known fact that the banking industry plays a huge role in today’s society, the industry has grown rapidly of many decades and still growing. The banking sector is that sector of the society that is actually responsible for the handling of financial assets for other sector of the economy, they do this by investing the financial assets in order to create more wealth in the society while regulating all the activities involved in the process. (What is the banking Sector 2015)
Foreign Exchange Market allows currencies to be exchanged to facilitate international trade and financial transactions. Evolution of the market in Bangladesh is closely linked with the exchange rate regime of the country. It had virtually no foreign exchange market up to 1993. BANGLADESH BANK, as agent of the government, was the sole purveyor of foreign currency among users. It tried to equilibrate the demand for and supply of foreign exchange at an officially determined exchange rate, which, however, ceased to exist with introduction of current account convertibility. Immediately after liberation, the Bangladesh currency taka was pegged with pound sterling but was brought at par with the Indian rupee. Within a short time, the value of taka experienced a rapid decline against foreign currencies and in May 1975, it was substantially devalued. In 1976, Bangladesh adopted a regime of managed float, which continued up to August 1979, when a currency-weighted basket method of exchange rate was introduced. The exchange rate management policy was again replaced in 1983 by the trade-weighted basket method and US the dollar was chosen as intervention currency. By this time a secondary exchange market (SEM) was allowed to grow parallel to the official exchange rate. This gave rise to a kerb market.
A country cannot have a healthy economy without a strong banking system. Sri Lanka’s banking system has well balanced the economy for the past three decades with several internal and external issues.