1 Final Assignment Topic- Shadow Banking in Bangladesh: Problems & Prospects Course Code- ACT 405 Course Name – Cost Accounting Submitted By1. Tanzim Shahriar Alam-201011102 2. Atiqur Rahaman- 193003902 3. Taslia Siraj- 193002102 4. Jabunessa Nahin- 193005502 5. S.M Fahim Tazwar- 193004302 Submitted ToFahmida Akther Assistant Professor School of Business East Delta University Submission Deadline- 28/12/2021 2 Table of Contents Introduction- ..................................................... 3 Shadow Banking in Bangladesh- ...................... 4 Literature Review.............................................. 6 Existing problems ........................................... 11 Remedial action to win the problems.............. 14 Future of Shadow Banking in Bangladesh...... 16 Abstract-.......................................................... 17 Table of Authors and Research Papers ........... 18 Job Roaster ...................................................... 71 References ....................................................... 72 3 IntroductionShadow Banking is a unique term to describe the regular activities of Bank that happens outside the sector of Bank. The term shadow banking can be described as the credit intermediaries which includes both activities and entities outside the regular day to day banking activities. The shadow banking was first attributed the term by an investment manager named Paul McCulley in the year 2007 by providing the reference to American Non-Financial organization that allows short term deposits to create long term loans. If we describe briefly, shadow banking is those who conduct the regular works of bank outside the banking sector which includes Investment Banks, Mortgage Lenders, Insurances companies etc. When the people think about the activities of the bank, they think of the renowned banks in Bangladesh such as HSBC, City Bank, Bank Asia, EBL etc. The commercial banks are strictly regulated by the Government and other federal authorities (Kiplinger.com, n.d.). On the other hand, shadow banking carries out the lending operations by financial organizations which are not regulated as banks. It depends on short term funds to create long term loan which quite similar to the commercial banks. But shadow banking is not depository they don’t need to deposit to lend to borrowers. Instead, they depend on the investors for the money to make loans. 4 Shadow Banking in BangladeshShadow Banking is now widely used in Bangladesh. Before the rise of COVID-19 the usage of shadow banking was minimum. During the pandemic the users of shadow banking has increased in significant figure. There is a financial technology named Fintech which has been growing rapidly across the country. Some materials which include mobile banking such as Nagad, Bkash, Rocket, Upay are the examples of shadow banking which is controlled by several financial organization or by separate organization (outside the banking sector). For example, Bkash is the parent organization of the Brac Bank, Upay is also a parent organization of UCBL bank. Bkash is controlled and monitored under the authority of Bangladesh Bank as a subsidiary of Brac Bank, where UPAY is monitored by United Commercial Bank ltd (Express, n.d.). On the other hand, agent banking is another type of shadow banking. It is used by those people who are not used to the banking system. Maximum users of agent banking are local people in Bangladesh. According to the statement of government this type of banking is not regulated in the country, though it is not illegal, it has certain permission from Bangladesh to run this type of banking in the country. However, the management suggest that there should be monitoring system and customer protection law to control the risks which are connected with shadow banking. The Size of shadow banking is rapidly increasing in Bangladesh. According to the CNBC statement, there is 75 percent increase in shadow banking usage since the COVID-19 has started. In other countries such as China 16 percent increase in shadow banking usage (The Express, The Financial Express). In Bangladesh shadow banking have helped those people who do not understand the rules and regulations of the traditional banking they can easily do transaction through shadow banking such as mobile and agent making. Moreover, the vendors who operate 5 the agent banking provides income to the vendor as they earn some interest on the amount transaction they do. 6 Literature Review 7 8 9 Novelty of the work 10 11 Existing problems 12 13 14 Remedial action to win the problems The fundamental course of shadow banking is to channel the money pools of focus, for example, non-monetary corporate and resources figure out how to financing and holding credits, securities and elements and so on This financial area need guidelines reason for its size 30%-35% of the absolute monetary framework. The foundational dangers of shadow banking 15 Shadow banking have no immediate and plain admittance to public site of liquidity or credit fence. They have no resistance in national bank operations. That demonstrate shadow banking/portable banking has no restricted ability to endure. As indicated by the monetary steadiness board an association of monetary administrative specialists take choice to fostered a more extensive meaning of shadow banking that incorporates all elements outside the controlled financial capacities. They suggest some vital parts of intermediation's are: Boost the fluid reserve funds: day by day check the money account, incomes, currency markets account other than endorsements of stores and short reach government venture for future assistance. Development change: Most of the transient asset to put resources into long haul resources. Liquidity change: this liquidity change like development change that require utilizing cash like liabilities to bought strong to sell resources like advances. Influence: the majority of the utilizing plans like getting the means to purchase fixed resources for amplify the conceivable addition (or loses) on venture. Credit hazard of move: First party facing the challenge and moving it from the primary generator of the advance to another party. As indicated by the shadow banks would bargain representatives’ vendors that assets (repos). In repurchase arrangement an embodiment needing reserves sells a security and to expand those assets, and vows to purchase the security back(repay) at a restricted length with explicit date. 16 Future of Shadow Banking in Bangladesh According to the report of FSB, the activity of shadow banking is rising rapidly. The report says the FSB, which facilitates monetary guideline for the Group of 20 Economies (G20), said its "thin" proportion of shadow banking exercises that could represent a danger to steadiness, rose 3.2 percent to $34.2 trillion of every 2015, the most recent year for which figures have been gathered. Aside from obligation speculation reserves, the proportion of shadow banking additionally incorporates the repurchase or repo and obligation securitization markets just as mutual funds associated with credit. A portion of the area's development was in the euro region where credit was diminished by banks, burdened with terrible advances and harder guideline, the FSB said in its 94-page yearly checking report. Expansions in the tight proportion of shadow banking can likewise be put down to better detailing and in addition to a speed increase in movement. Nearly 65% of the $34 trillion is comprised of open-finished fixed pay reserves, land assets and currency market subsidizes which have developed around 10% on normal in the course of recent years. Meanwhile, gotten financing from agent vendors and secularizations has fallen (Shadow banking activity continues to grow: FSB report, n.d.). The future of Shadow Banking in Bangladesh is bright as according to the report given by the Bangladesh Bank currently the users of mobile banking are 21 crores. The population of Bangladesh is approximately 18 crores. We can see that there is massive increase in the usage of mobile banking. Why the consumers prefer mobile banking? The consumers claim mobile banking as it is easy to use and can do several transactions through a gadget easily. It accessible to all people. Moreover, mobile banking apps like BKASH, NAGAD are quite secured and if you an internet connection and other important documents anybody can be a mobile banking user. Most importantly, the use of shadow banking have helped Bangladesh’s economy to develop because 17 the agents of mobile banking earn interest on the basis of the transaction occurs in a day, so as a result it is reducing the rate of unemployment and the standard of living is developing day by day. If we think about the future of shadow banking, the operation of shadow banking should be more secured and enhanced. In some cases, mobile banking is not considered as secured banking because it leads to hacking of personal data or in other cases the PIN number of the Account can be hacked by the hacker. The Bangladesh Government and other Authorities should introduce monitoring, security and consumer protection laws to reduce the risk associate with the activities of shadow banking and other branches of shadow banking including mobile and agent banking. If these security measures are taken and implemented effectively the growth of shadow banking will boom in Bangladesh as well as it will contribute to our country’s GDP to rise. AbstractThis Study reports on the review of Shadow Banking in context to Bangladesh. In this paper we discussed about the all sectors of Shadow banking. We have provided some opinions about the branches of shadow banking including agent and mobile banking. In this paper we cover literature review, future of shadow banking existing problems solutions and novelty. We have collected the data from different sources especially from Google school and other useful articles. Moreover, we recognized holes in the writing and proposed seven exploration inquiries to be addressed in ongoing examinations to propel information on the shadow banking area. The discoveries of this audit might fill in as a strong reference for researchers investigating different parts of shadow banking to foster our comprehension of this area. 18 Table of Authors and Research Papers 19 20 21 22 23 24 25 26 Research Paper 3 27 Abstract Methodology 28 29 30 31 Research Paper 4 Methodology 32 33 Research Paper 5 Methodology 34 35 36 37 Research Paper 6 38 39 Research Paper 7 Methodology 40 41 Research Paper 8- 42 43 Research Paper 9 Methodology 44 45 Research Paper 10 Methodology 46 47 Research Paper 11 48 Methodology 49 Research Paper 12- 50 51 52 Research Paper 13 Research Paper 14- Methodology 53 54 Research Paper 15 55 56 Research Paper 16- Research Paper 17 57 Research Paper 18 58 Research Paper 19 59 Research Paper 20 Research Paper 21 Research Paper 22 60 Abstract 61 Research Paper 23 62 63 Research Paper- 24 Title- From shadow banking to digital financial inclusion: Regulatory framework contestation between China and the FSB 64 Research Paper 25 65 Research Paper 26 66 67 Research Paper 27 68 Research Paper 28 69 Research Paper 29 70 Research Paper 30 Abstract 71 Job Roaster NAME TOPICS COVERED 1. TANZIM SHAHRIAR INTRODUCTION ABSTRACT AND ALAM FUTURE OF SHADOW BANKING IN BANGLADESH. LITERATURE REVIEW 2. TASLIA SIRAJ AND EXITING PROBLEMS 3. JABUNESSA NAHIN REMDIAL ACTIONS TO WIN THE PROBLEM 4.ATIQUR RAHAMAN NOVELTY OF THE WORK 5 S.M FAHIM TAZWAR NOVELTY OF THE WORK 72 References Express, T. (n.d.). Shadow banking booms in Bangladesh amid lax monitoring, finds BIBM study. Retrieved from The Financial Express: https://thefinancialexpress.com.bd/economy/shadowbanking-booms-in-bangladesh-amid-lax-monitoring-finds-bibm-study-1638411980 Fitchratings.com. (n.d.). Retrieved from https://www.fitchratings.com/research/non-bank-financialinstitutions/global-shadow-banking-growth-increases-systemic-risks-21-05-2019 Kiplinger.com. (n.d.). Retrieved from https://www.kiplinger.com/article/credit/t040-c032-s014-whatyou-need-to-know-about-shadow-banking-system.html Shadow banking activity continues to grow: FSB report. (n.d.). Retrieved from The Daily Star: https://www.thedailystar.net/business/global-business/shadow-banking-activity-continuesgrow-fsb-report-1403731 The Express. (The Financial Express). Retrieved from Shadow banking: Growing trends and concerns: https://thefinancialexpress.com.bd/public/views/shadow-banking-growing-trends-andconcerns-1574519144 What’s Driving the Growth in ‘Shadow Banking’. (n.d.). Retrieved from The University of Chicago Booth School of Business: https://www.chicagobooth.edu/review/whats-driving-growth-shadowbanking Pozsar, Z., Adrian, T., Ashcraft, A., & Boesky, H. (2010). Shadow banking. New York, 458(458), 3-9. Adrian, T., & Ashcraft, A. B. (2016). Shadow banking: a review of the literature. Banking crises, 282315. Adrian, T., & Ashcraft, A. B. (2012). Shadow banking regulation. Annu. Rev. Financ. Econ., 4(1), 99140. https://www.imf.org/external/pubs/ft/fandd/2013/06/basics.htm
