'A developed bond market helps avoid excessive dependence on banks and facilitates to diversify corporate risk beyond the banking system'
Experts at a round-table discussion about the “Development of Bond Market in Bangladesh” said deep, diversified, and well-functioning bond market is essential for the country’s economic development.
The discussion on Thursday was held at the Bangladesh Institute of Bank Management (BIBM) where experts further pointed out that the capital market provides long-term investment instruments for pension funds, mutual fund and insurance companies.
At the discussion, Prof Dr Prashanta Kumar Banerjee, director (RD & C), BIBM, said: “A developed bond market helps avoid excessive dependence on banks and facilitates to diversify corporate risk beyond the banking system. As Bangladesh’s economy continues to grow rapidly, it faces an increasing need for diverse and sophisticated financial services and risk management financial products including financing for infrastructure.”
Dr Toufic Ahmad Chowdhury, director general, BIBM, said: “The sustainable development of the bond market is very important for our country. Policy makers also want to improve the bond market situation. Bangladesh needs to give attention on the development of its bond market.”
Experts also said that local government bonds can finance infrastructure projects easily if a country has a deeper bond market as long maturities of infrastructure projects are better suited to bond financing than to bank financing. They further said the issuance of government bonds will not only help follow market-oriented financing of fiscal deficit and conduct monetary management but also provide a benchmark yield curve as the reference on returns for other securities.