Submitted to:

Dr. Md. Hasan Uddin

Professor
Department of Finance and Banking
Dr. Kumar Debasis Dutta
Professor
Department of Finance and Banking
Faculty of Business Administration

Submitted by:
Sumaiya Afrin
ID:1803011; Reg:08318
Level:4; Semester:2
Department of Finance and Banking
Faculty of Business Administration
Patuakhali Science and Technology University
Submission Date:01-01-2024
 Financial Institutions involved in the Financial Markets
Introduction: Financial institutions are organizations that help people manage and grow their
money. They include banks, credit unions, insurance companies, and investment firms. Financial
markets are places where people can buy and sell financial assets, such as stocks, bonds, and
commodities. Financial institutions and markets play a key role in the economy, as they help
businesses and governments raise funds, provide financial services, and facilitate trade and
investment.
Some of the major types of financial institutions and markets are:
 Central banks: These are the financial institutions that oversee and regulate all other
banks. They also conduct monetary policy, which affects the supply and demand of
money and interest rates. The central bank in the United States is the Federal Reserve
Bank (Fed).
 Retail and commercial banks: These are the financial institutions that provide deposit
accounts, loans, credit cards, and other products and services to individuals and
businesses. Retail banks focus on consumers, while commercial banks work with
businesses.
 Internet banks: These are the financial institutions that offer the same products and
services as retail and commercial banks, but through online platforms instead of physical
locations. Internet banks may have lower fees and higher interest rates than traditional
banks.
 Credit unions: These are the financial institutions that are owned and operated by their
members, who share a common bond, such as a profession, a location, or a religion.
Credit unions offer similar products and services as banks, but often with lower fees and
higher interest rates.
 Savings and loan (S&L) associations: These are the financial institutions that specialize
in providing mortgage loans to individuals and businesses. They also offer deposit
accounts and other products and services. S&Ls are regulated by the Federal Deposit
Insurance Corporation (FDIC).
 Investment banks and companies: These are the financial institutions that help businesses
and governments raise money by issuing and selling securities, such as stocks and bonds.
They also provide financial advice, research, and trading services. Investment companies,
such as mutual funds and hedge funds, pool money from investors and invest it in various
securities and assets.
 Brokerage firms: These are the financial institutions that act as intermediaries between
buyers and sellers of securities and other financial assets. They charge fees or
commissions for their services. Brokerage firms may also offer investment advice,
research, and trading platforms.
 Insurance companies: These are the financial institutions that provide protection against
various risks, such as accidents, illnesses, or losses. They charge premiums to their
 customers and pay out claims when the insured events occur. Insurance companies may
also offer investment products, such as annuities and life insurance.
 Mortgage companies: These are the financial institutions that originate and service
mortgage loans. They may sell the loans to other financial institutions, such as banks or
S&Ls, or keep them in their own portfolios. Mortgage companies may also offer other
products and services, such as refinancing and home equity loans.
These financial institutions collectively form the backbone of the financial system, fostering
economic growth by allocating capital efficiently and managing various financial risks. Their
activities in the financial markets contribute to the overall functioning and development of the
global economy.

Financial system in Bangladesh: The financial system of Bangladesh is comprised of

three broad fragmented sectors:
1.Formal Sector
2.Semi-Formal Sector
3.Informal Sector
The sectors have been categorized in accordance with their degree of regulation.
1. The formal sector includes all regulated institutions like Banks, Non-Bank Financial
Institutions (FIs), Insurance Companies, Capital Market Intermediaries like Brokerage
Houses, Merchant Banks etc.; Micro Finance Institutions (MFIs).
2. The semi formal sector includes those institutions which are regulated otherwise but do
not fall under the jurisdiction of Central Bank, Insurance Authority, Securities and
Exchange Commission or any other enacted financial regulator. This sector is mainly
represented by Specialized Financial Institutions like House Building Finance
Corporation (HBFC), Palli Karma Sahayak Foundation (PKSF), Samabay Bank,
Grameen Bank etc., Non-Governmental Organizations (NGOs) and discrete government
programs.
3. The informal sector includes private intermediaries which are completely unregulated.

Financial Institutions in Bangladesh: The financial sector in Bangladesh is regulated by

the Bangladesh Bank, which is the central bank of Bangladesh and the chief regulatory authority
in the banking sector. The banking sector in Bangladesh consists of several types of institutions,
including scheduled and non-scheduled banks, state-owned commercial banks, and private
commercial banks. There are currently 61 scheduled banks in Bangladesh, of which 6 are state-
owned commercial banks. Additionally, there are 3 specialized banks that were established for
specific objectives like agricultural or industrial development.
Apart from banks, there are also non-bank financial institutions (NBFIs) in Bangladesh. These
include investment banks, credit rating companies, and stock exchanges. The semi-formal sector
comprises some specialized financial institutions such as House Building Financial Corporation
(HBFC), Palli Karma Sahayak Foundation (PKSF), Samabay Bank, and Grameen Bank.
Here is a list of some of the top finance companies in Bangladesh:
1. IDLC Finance Limited
2. United Finance Limited
3. Delta Brac Housing Finance Corporation Limited
4. LankaBangla Finance Limited
5. National Finance Limited
6. Prime Finance & Investment Limited
7. First Lease Finance & Investment Limited
8. Phoenix Finance & Investments Limited
9. Union Capital Limited
10. Bay Leasing & Investment Limited

Regulatory Authority of Financial Institutions in Bangladesh: The regulatory

authority for financial institutions in Bangladesh is the Bangladesh Bank. Bangladesh Bank,
established in 1971, is the central bank of Bangladesh and is responsible for formulating and
implementing monetary and credit policies, managing the country's foreign exchange and gold
reserves, and regulating the banking sector.
In addition to the Bangladesh Bank, other regulatory bodies oversee specific segments of the
financial industry in Bangladesh. For example:
1. Bangladesh Securities and Exchange Commission (BSEC): It regulates the capital
market, including stock exchanges and securities market participants.
2. Insurance Development and Regulatory Authority (IDRA): It regulates the insurance
industry in Bangladesh.
These regulatory bodies work together to ensure the stability, integrity, and growth of the
financial sector in Bangladesh.

Classification of Financial Institutions in Bangladesh: The financial institutions in

Bangladesh can be classified into three categories: Money Market, Capital Market, and Foreign
Exchange Market.
1. The Money Market includes banks, non-bank financial institutions, and primary dealers.
2. The Capital Market includes investment banks, credit rating companies, and stock
exchanges.
3. The Foreign Exchange Market includes authorized dealers.
In addition, the Department of Financial Institutions & Markets of Bangladesh Bank has issued a
circular that outlines the loan/lease classification and provisioning process for financial
institutions in Bangladesh. The circular groups all loans and leases into four categories:
 Short Term Finance
 Lease Finance
 Term Finance and
 Housing Finance
The circular also outlines the objectives of classification and provisioning against loan/lease
provided by financial institutions, which include assessing the quality of loan/lease based on
prescribed objective and subjective criteria, ensuring maintenance of required provision for
anticipated losses against different classification of loan/lease, and ensuring appropriate
disclosure on the quality of loan/lease in the financial reports and statements.

Global Financial Institutions and their activities: Global financial institutions play a
crucial role in the world economy by providing various financial services and facilitating
economic activities. These institutions include central banks, commercial banks, investment
banks, asset management firms, and international organizations. Here are some of the key global
financial institutions and a brief overview of their activities:
1. International Monetary Fund (IMF):
Activities: The IMF provides financial assistance and policy advice to member countries
facing balance of payments problems. It aims to promote international monetary cooperation,
exchange rate stability, balanced trade growth, and economic stability.
2. World Bank:
Activities: The World Bank focuses on providing financial and technical assistance to
developing countries for development projects. It supports initiatives in areas such as
infrastructure, education, healthcare, and poverty reduction.
3. Bank for International Settlements (BIS):
Activities: The BIS acts as a bank for central banks and fosters international monetary and
financial cooperation. It provides a forum for central banks to exchange information and
collaborate on financial and monetary matters.
4. European Central Bank (ECB):
Activities: The ECB is responsible for monetary policy in the Eurozone. It aims to maintain
price stability by setting interest rates and conducting monetary policy operations.
5. Federal Reserve System (Fed):
Activities: The Fed is the central banking system of the United States. It conducts monetary
policy to achieve maximum employment, stable prices, and moderate long-term interest
rates.
6. Commercial Banks:
Activities: Commercial banks offer a wide range of financial services, including accepting
deposits, providing loans, and facilitating domestic and international transactions. They play
a crucial role in the functioning of the global financial system.
7. Investment Banks:
 Activities: Investment banks assist companies in raising capital through the issuance of
stocks and bonds. They also provide advisory services for mergers and acquisitions, and they
engage in trading and investment activities.
8. Hedge Funds:
Activities: Hedge funds pool capital from high-net-worth individuals and institutional
investors to invest in a variety of financial instruments. They employ various strategies to
generate returns, often including leverage and derivatives.
9. Asset Management Firms:
Activities: Asset management firms manage investment portfolios on behalf of individuals,
institutions, and other clients. They offer a variety of funds, including mutual funds,
exchange-traded funds (ETFs), and pension funds.
10. SWIFT (Society for Worldwide Interbank Financial Telecommunication):
Activities: SWIFT provides a secure messaging network for financial institutions globally,
facilitating the transfer of information and financial transactions, including international fund
transfers.
These institutions collectively influence global economic conditions, monetary policy, and
financial stability. Their activities are interconnected, and they collaborate to address challenges
and promote sustainable economic growth.

Global Financial Institutions operating in Bangladesh and their activities in

Bangladesh: Several global financial institutions operate in Bangladesh, engaging in various
activities such as banking, investment, and financial services Here are some global financial
institutions and their activities in Bangladesh:
1.Standard Chartered Bank:
 Standard Chartered is a British multinational bank with a significant presence in
Bangladesh.
 It offers a wide range of banking and financial services, including retail banking,
corporate banking, and treasury services.
2.HSBC:
 HSBC is another British multinational bank with operations in Bangladesh.
 It provides services such as retail banking, commercial banking, and global banking
and markets.
3.Citibank:
 Citibank a part of Citigroup, has a presence in Bangladesh.
 It offers various banking services, including corporate banking, treasury and trade
solutions, and investment banking.
 4.UBS:
 UBS is a Swiss multinational investment bank that may have a presence in
Bangladesh.
 It is known for its wealth management, investment banking, and asset management
services.
5.JP Morgan Chase:
 JP Morgan is a prominent American multinational investment bank and financial
services company.
 It might have operations in Bangladesh, particularly in areas such as investment
banking and asset management.
6.Standard & Poor's (S&P):
 S&P is a global credit rating agency, and its assessments are used by investors and
financial institutions worldwide.
 S&P's ratings and analyses may impact the investment climate and activities in
Bangladesh.
7.International Finance Corporation (IFC):
 IFC is a member of the World Bank Group and operates in Bangladesh to promote
private sector development.
 It provides investment and advisory services to support sustainable business growth.
8.Asian Development Bank (ADB):
 ADB is a regional development bank that works to reduce poverty in the Asia-Pacific
region.
 ADB funds various development projects in Bangladesh, supporting sectors such as
infrastructure, education, and healthcare.
9.World Bank:
 The World Bank operates in Bangladesh, providing financial and technical assistance
for development projects.
It supports initiatives to reduce poverty, improve infrastructure, and enhance economic It's
essential to note that the presence and activities of these institutions may evolve, and new
institutions may enter the market. Additionally, the specific activities of each institution can vary
widely based on their focus areas and strategies development.

Conclusion: Financial institutions involved in financial markets can vary based on specific
contexts, time periods, and individual institutions. However, some general observations and
conclusions can be made:
1.Diversity of Players:
Financial markets involve a diverse range of institutions, including banks, investment banks,
hedge funds, insurance companies, and other non-banking financial institutions. Each plays a
unique role in the market, contributing to its overall functioning.
2.Risk Management:
Financial institutions are actively engaged in risk management to mitigate potential losses.
This includes assessing market risk, credit risk, operational risk, and other factors. The ability
of financial institutions to effectively manage risks is crucial for their stability and
sustainability.
3.Regulatory Compliance:
Financial institutions operate in a highly regulated environment. Compliance with financial
regulations is essential for maintaining the stability of the financial system. Institutions need
to adapt to changes in regulations, and their compliance practices impact their reputation and
ability to operate.
4.Innovation and Technology:
Financial institutions are increasingly leveraging technology for various purposes, including
trading, data analysis, customer services, and risk management. The adoption of fintech and
innovative technologies has the potential to enhance efficiency but also introduces new
challenges, such as cybersecurity risks.
5.Global Interconnectedness:
Financial markets are globally interconnected, and institutions often operate on an
international scale. The interconnectedness can lead to systemic risks, as demonstrated during
the global financial crisis in 2008. Institutions need to consider global factors and potential
spillover effects when making financial decisions.
6.Market Liquidity and Volatility:
Financial institutions play a crucial role in providing liquidity to markets. The level of
liquidity and volatility in financial markets can be influenced by the actions and decisions of
major financial institutions. Sudden changes in market conditions can impact the
performance and stability of these institutions.
7.Financial Inclusion:
Some financial institutions are actively working to promote financial inclusion by providing
services to underserved populations. This includes efforts to extend banking services to the
unbanked, offering microfinance, and supporting sustainable finance initiatives.
8.Economic Indicators:
The performance and behavior of financial institutions can serve as indicators of broader
economic health. For example, the banking sector's stability and profitability are often
viewed as important indicators of the overall economic well-being of a country.
 9.Ethical Considerations:
Ethical considerations, transparency, and responsible financial practices are increasingly
important for financial institutions. Stakeholders, including customers and investors, are
placing greater emphasis on ethical behavior and corporate social responsibility.
In conclusion, financial institutions play a multifaceted role in financial markets, and their
actions have far-reaching implications for the global economy. Ongoing attention to risk
management, regulatory compliance, innovation, and ethical considerations is crucial for the
sustainable and responsible functioning of financial institutions in the dynamic landscape of
financial markets.