To ensure sustainable economic growth, Bangladesh must gradually reduce its dependence on bank loans and move toward a more capital market-based financing structure - experts said at a roundtable discussion titled "Bridging the Gap - Transitioning from Bank Finance to Capital Market Finance," organised by IDLC Investments Limited in Dhaka recently.
Mesbah Uddin Ahmed, Managing Director of IDLC Investments Limited, presented the keynote paper at the event. The discussion was attended by Mominul Islam, Chairman, Dhaka Stock Exchange (DSE); Saiful Islam, President, DSE Brokers Association (DBA); Ahmed Rashid Lali, Former President, DBA; Rupali Haque Chowdhury, President, Bangladesh Association of Publicly Listed Companies (BAPLC); Istequemal Hussain, Deputy Managing Director, Bangladesh Bank; and senior representatives from leading private and financial institutions.
Highlighting the imbalance in Bangladesh's financial structure, Mesbah Uddin Ahmed said, "Bangladesh's rapid economic growth has largely been bank-financed. This overreliance on short-term, deposit-based funding for long-term investments has created a structural imbalance in the economy."
He added that emerging economies typically have market capitalization-to-GDP ratios between 50 and 70 percent, while developed economies exceed 100 percent. "In India, the ratio is over 100 percent, in Vietnam around 51 percent - but in Bangladesh, it stands at only 7 percent. This clearly indicates that the corporate sector remains heavily dependent on bank loans and asset-liability mismatches."
