Impact of financial sector reforms in Bangladesh under structural adjustment program : an evaluation | |
| Author | Nizami, Md. Helal Uddin |
| Call Number | AIT RSPR no. SM-00-51 |
| Subject(s) | Banks and banking--Bangladesh Bank management--Bangladesh |
| Note | A research study submitted in partial fulfillment of the requirements for the degree of Master of Business Administration, School of Management |
| Publisher | Asian Institute of Technology |
| Series Statement | Research studies project report ; no. SM-00-51 |
| Abstract | Financial sector specially banking structure plays an important role in the economic development of a country. For Bangladesh, a sound and efficient banking system is one of the most obvious pre-condition to achieve economic advancement. A total of 49(4NCBs, 28 PCBs and 13 FCBs) banks are working in Bangladesh with 57,000 crore TK. deposits, 51,000 crore TK. loans, 2.5 crore depositors and 6.2 million loanees up to December, 1999. With a view to making financial sector more discipline, organized and productive several measures were taken during a decade under policy stabilization and reform package. Bangladesh, in fact, started implementing financial sector reform measures primarily since 1980s and with a broad based program since 1990s as a part of its overall economic stabilizatio.n and key macroeconomic growth under Structural Adjustment Program (SAP). To ensure an effective role of the financial sector in the economic development, the implementation of the reform measures is also continued till now. However, the present study has-evaluated the reform measures so far undertaken in the financial sector since 1988 and examined their implications and impact on the. overall economy and specially in the banking sector. To illustrate the background as well as reforms objectives in the financial sector-pre-reform situation of Bangladesh has also been considered. For the purpose of impact evaluation, several important aspects such as deposit and credit trends, loan outstanding , classification and provisioning, capital adequacy, return on assist (ROA) and assets utilization, foreign exchange and capital market structure, interest rate structure, legal framework, CAMEL raiting and so on were taken into account as to reform measures as well as to see whether these measures so far undertaken are enough to overcome the existing problems prevailing in our financial sector. It is observed that the overall performance of the reform measures are of course very poor and unsatisfactory. It is thus seen that in the initial stage of reform during 1987/88 - 1990 was confined with extremely conditional loan through new lending instruments such as SAL-SECAL. The next phase of the reforms that started in 1991 and ended in 1996 namely as FSRP. In the study it is found that FSRP succeeded in the improvement of some regulatory framework such as liberalizing interest rates, development of indirect monetary instruments, introducing loans classification and provisioning guidelines, etc. As a result reform measures under FSRP have failed mostly to establish financial stability in the banking sector. In order to make financial sector dynamic and efficient the next phase of reforms program started in 1997 under CBRP with due attention in the management of NCBs, restructuring the commercial banks, technology development, restoration of capital adequacy of banks based on risk-weighted assets, etc. However, it has also been observed in the study that like FSRP, reform measures under CBRP could not able to bring any visible positive result in terms of loan recovery and operational efficiency with a few exception. In fact three years (1997-1999) time may be pre-mature to evaluate CBRP reform measures as more things yet to be done. But over a decade (1989-1999) is not inadequate to comment. Thus the study reveals that financial sector reform measurers are largely unsuccessful to fulfill the reforms target as expected. Against the backdrop the present study is undertaken to examine the post-reform situations and present in detail the position of the banking sector. It is expected that the findings of this study would be helpful to identify the practical problems encountered in the structural adjustment process relevant to financial reform and point out areas for corrective measures towards policy implications for making financial sector competitive, profitable and productive. |
| Year | 2000 |
| Corresponding Series Added Entry | Asian Institute of Technology. Research studies project report ; no. SM-00-51 |
| Type | Research Study Project Report (RSPR) |
| School | School of Management |
| Department | Other Field of Studies (No Department) |
| Academic Program/FoS | Master of Business Administration (MBA) (Publication code=SM) |
| Chairperson(s) | Tang, John C. S.; |
| Examination Committee(s) | Sununta Siengthai;Amin, A T.M. Nurul; |
| Scholarship Donor(s) | DAAD Partial Scholarship; |
| Degree | Research Studies Project Report (M.B.A.) - Asian Institute of Technology, 2000 |