Uploaded by Tanzim Shahriar

Shadow Banking Final Paper

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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
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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
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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.
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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
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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
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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.
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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
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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.
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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
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Research Paper 20
Research Paper 21
Research Paper 22
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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
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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
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