Papers by Suborna Barua
Non-life insurance companies are an important part of the financial system in any country. Consta... more Non-life insurance companies are an important part of the financial system in any country. Constant development and financial sustainability of these institutions is key to foster the rapidly growing economic activities of emerging economies like Bangladesh. This study made an attempt to establish the impact of different firm-specific factors on profitability using the non-life insurance sector in Bangladesh. A thriving insurance industry, especially in the non-life sector, can accelerate economic growth by mobilizing large funds and providing risk-hedging services to economic activities. This paper investigates the temporary and permanent impact of different firm-specific factors on financial performance, using the case of the non-life insurance sector in Bangladesh: one of the fastest growing economies in the world. Using panel data on 16 non-life insurance companies from 1999 to 2014, this paper utilizes both Static Panel Data (SPD) and Dynamic Panel Data (DPD) estimation techniques. For DPD estimation, a Pooled Mean Group (PMG) estimator built on an ARDL Framework that can produce short run and long run impacts separately has been employed. In addition to the average impact generated from static estimations, this paper identifies the significant impact of all variables on profitability in the long-term (those of a permanent nature) while the investment ratio shows some impact in the short-term (those of a temporary nature). The results of the study indicate that the average impact is predominantly derived from the long-term and thus appear to be permanent in nature. Moreover, investment ratio contributes positively to profitability, mostly in the short-term (temporarily) with some effects in the long-term. The findings on liquidity and investment ratio suggest the permanent nature of their impact on profitability in the long-term and, hence, insurers are probably better served investing funds in short-term opportunities (e.g. investing in securities) rather than in long-term ones. Lastly, the empirical results regarding the impact of leverage is not clear, as it shows mixed impact in two different estimations, including the permanent nature of negative impact in the long-term. The non-life insurance companies of Bangladesh should implement strong policies to reduce the faulty underwriting procedures to improve the profitability. This paper offers significant contributions to the literature by separately identifying the ‘temporary’ and ‘permanent’ impact of several determinants, thereby producing novel estimations for Bangladesh that may have implications for other emerging economies.
This paper seeks to innovate financial models that drive investment towards sustainable activitie... more This paper seeks to innovate financial models that drive investment towards sustainable activities. And also seeks to provide financing for development process with a perspective on the role of financial sector. Our banks, non-bank financial institutions, capital market and other semi-formal & informal financial sector can play a vital role to design and implement the goals of sustainable development. They can act as bridge to implement the terminology and investment approaches of sustainable development.
In this paper, we shall highlight some proposal from financial sector to drive out the goals of sustainable developments in the light of reality. And we want to inject fresh thinking, bringing in new ideas and players from outside the financial sector.
The main purpose of this study is to determine the impact of RTAs (Regional Trade Agreement) on t... more The main purpose of this study is to determine the impact of RTAs (Regional Trade Agreement) on the trade relation between the member and the non member countries of the agreement and also to determine the winners and losers in this relatively new form of trade. In order to establish this impact the trade statistics such as export – import data, foreign direct investment both inflow and outflow etc for the countries involved in the major Regional Trade Agreements of the world (NAFTA, EU) before and after the formation of the economic integration and the actual change in their trade relationship with the non-member countries have been taken. The research is based on regression analysis and hypothesis testing conducted with the data obtained. Both intra bloc and extra bloc trade data have been used to measure the trade collection and trade diversion of these countries.
INTERNATIONALIZATION AND PERFORMANCE: EVIDENCE FROM BANGLADESHI BANKS
Internationalization of banking institutions has been more evident to a greater extent recently d... more Internationalization of banking institutions has been more evident to a greater extent recently due to the advancement of technology and global inter-connectedness of the business world. As the ‘engine of economic growth’ banks are the dominant players in Bangladesh financial market. Due to quick market saturation, highly competitive domestic market and need for innovation, banks in Bangladesh are tending to move towards international market. Using six financial performance measures and five internationalization variables, this paper examines the impact of different internationalization dimensions on financial performance of the banks. The study estimates 18 models on panel data of 35 scheduled banks for 2005 to 2014 using Dricoll-Kraay, Prais-Winsten alongside Fixed and Random Effect estimation techniques. Findings suggest that net effect of internationalization is on average negative for all banks however it is significantly negative for the SOBs compared to PCBs. The paper also finds that physical presence in foreign countries, level of internationalization banks place themselves and age of international operation have significant impact on most of the performance measures. This paper contributes to existing literature by: using new dimensions to define internationalization, examining impact on six different performance measures, being the first study on internationalization of Bangladeshi banks, and generating some unique findings.
Cash flow prediction is involved in a number of economic decisions, particularly in investment. P... more Cash flow prediction is involved in a number of economic decisions, particularly in investment. Previous researches conducted in the United States have provided inconsistency in the results of investigating accounting data, cash flow and accrual accounting data in predicting future cash flows. No published research has studied cash flow prediction in Bangladesh. The current study investigates the ability of accrual and cash flows accounting information to predict future cash flows of Bangladeshi listed companies. This study analyses Balance sheet, Income Statement and Cash Flow statement. In addition, cash flow ratios and Income statement based ratios are calculated in order to get the same pattern of result and to make comparisons. Data used in this study are collected from the financial statements of non-manufacturing companies listed on the Stock Exchange of Bangladesh from 2001 to 2010. Cash flow data are selected directly from the cash flow statements. Empirical results show that cash flow and accrual component of earnings can be used to predict future cash flows of Bangladeshi listed companies and cash flows have better predictive power than traditional based ratios. However, the results indicate that cash flow ratios are sometimes providing the better and accurate picture of the companies. In addition, this study finds that our economic crises as well as abnormal condition of our stock market are caused due to the manipulation of accounting data for consecutive financial year.
Bangladesh stock market has already seen a few shocks in the last 40 years of history. The first ... more Bangladesh stock market has already seen a few shocks in the last 40 years of history. The first big shock was encountered by the participants of the market in 1996. The latest one started from December 2010 and continued through 2011. The 2008 global financial crisis has impacted many financial institutions, business organizations, and thus has drastically downgraded the lives of many people at the individual level. The latest stock market crash in Bangladesh is also not an exception. This study around two thousand investors in the Dhaka Stock Exchange (DSE) has found a deeper impact of the crisis on the livelihood of many people. Findings suggest a drastic fall of return on investment by more than one-fifty percent. A systematic Chain Impact assessment on investment profit, investment capital, savings, income and finally consumption has been conducted that shows a substantial decrease in the level of income, savings, and consumption of the investors. Moreover, apart from their loss of confidence, health and psychological regularity, investors became more unfriendly in terms of their behavior towards their family, friends or even reluctant to their primary or secondary profession due to the turmoil faced.
Bangladesh Bank, the central bank of Bangladesh and a forerunner in pursuing environment-friendly... more Bangladesh Bank, the central bank of Bangladesh and a forerunner in pursuing environment-friendly banking, designed a structured three-phase Green Banking Guideline and instructed the scheduled banks to implement it by 2013. This paper aims to present a comprehensive picture about where the country stands in terms of adopting green banking practices. Examining 42 of total 54 scheduled banks of Bangladesh, the study finds that most banks are trapped in the lower boundaries of the performance greed. The state owned banks rank low in performance while the foreign banks have considerably better achievements. The paper also identifies a number of reasons for the banks " poor performance and proposes corrective measures. The lessons may be useful for redesigning banking practices around the world to save environment. JEL Code: E5, G2, G18, Q56 INTRODUCTION Global warming and climate change are now having direct impact on biodiversity, agriculture, forestry, dry land, water resources and human health. Bangladesh is one of the most vulnerable countries facing the impacts of climate change and therefore, has the concern in environmental degradation. The country recognizes the fact that the role of the banking sector is very crucial in growth and development activities and therefore, the banks must come forward to play more effective role in mitigating the environmental degradation. Bangladesh Bank has taken the role of a leader in initiating green banking and it is expected that green banking would be a major instrument through which banks can substantially contribute to serve the purpose. As banks comprise major source of finance to the industrial sector, they need to scrutinize that their financing is not used in or does not lead to any activity that cause environmental damage. Green banking requires that financial and business policies are not hazardous to environment and that the banks help to protect environment.
International trade financing: a comparative study on the performance of state-owned and private commercial banks of Bangladesh
International Journal of Monetary Economics and Finance, 2016
Asian Economic and Financial Review, 2015
The paper examines the relationship between financial development and economic growth using panel... more The paper examines the relationship between financial development and economic growth using panel data for five emerging South Asian countries -Bangladesh, India, Nepal, Pakistan and Sri Lanka. The heterogeneous panel data is collected from the World Bank for the period of 1974 to 2012. Economic Growth is represented by GDP growth rate, and for Financial Development, five major variables have been used: (i) Domestic Credit Provided by Financial Sector, (ii) Total Debt Services, (iii) Gross Domestic Savings, (iv) Broad Money, and (v) Trade Balance. Fixed Effect Panel regression model has been used and Time Fixed Effect, Cross Sectional Dependence, Heteroskedasticity, Serial Correlation and Cointegration have been tested for model fitness. The results indicate that growth of total debt services and domestic savings have significant impact on economic development of these countries. Interestingly, broad money, trade balance and domestic credit have no considerable influence on fostering economic growth which is generally unexpected. The paper places several arguments to explain these results. The study appears to be a first hand examination on the South Asian countries and adds new insight into the existing literature. The findings and discussions presented would be valuable in designing long term financial and macroeconomic policies by these countries.
World Congress Journal (Vol. 54, ISSN 2070-3724), Jun 24, 2009
Behavioral finance claims that investment attitude in the capital market is a function of investo... more Behavioral finance claims that investment attitude in the capital market is a function of investors’ psychology, sentiment and approach towards risk. To fulfill this thirst, many experiential studies like Gruber (1996), Piana (2001), Pindyck (1986), Hallahan et al. (2004), have found that there are numerous determinants at the macro and individual level, both measurable and non-measurable in numerical values, on which investment behavior of investors depends. Attitude towards risk, degree of risk tolerance or aversion and other risk characteristics largely influence the investment decision which is empirically observed by Deck et al. (2008). Alongside, investor sentiment regarding the prospect and sustainability of the capital market also controls the choice of investment size, tenure, horizon and timing. This study, in line with those efforts, tries to assess the principal determinants of investment, general and risk characteristics, and overall confidence on the stock market, on the part of the individual investors in Dhaka Stock Exchange (DSE) of Bangladesh. The results suggest that investment horizon, age, current profit, savings and income of investors and no. of family members significantly affect the investment size.
Proceedings of 2009 International Conference on Economics, Business Management and Marketing (Peer Reviewed, ISBN 978-8108-3816-4), Oct 9, 2009
Investors’ psychology, sentiment, attitude towards risk, degree of risk tolerance or aversion and... more Investors’ psychology, sentiment, attitude towards risk, degree of risk tolerance or aversion and other risk characteristics largely influence the investment decision which is empirically observed by Deck et al. (2008). Lashgari (2000), Dennis and Mayhew (2002), Suk and Tully (2003), and Wurgler (2006) have used general and risk characteristics of investors to developed models on confidence index on stock markets. This study, in line with those efforts, tries to measure the individual investors’ level of confidence on the Dhaka Stock Exchange (DSE) of Bangladesh as a determinant of investment. The Investor Confidence Index indicates a large portion of these individual investors have low confidence on the stock market of Bangladesh with none found to be positive in favor of a better immediate future.
Mutual Fund Performance: An Analysis of Monthly Returns of an Emerging Market
Research Journal of Finance and Accounting (RJFA)
Mutual funds dwell in a small market in Bangladesh. Around 25 mutual funds listed in the Dhaka St... more Mutual funds dwell in a small market in Bangladesh. Around 25 mutual funds listed in the Dhaka Stock Exchange (DSE) trade at an average of 2.7 times of their net asset value (NAV). This paper focused on evaluating the performance of more than 15 growth oriented mutual funds of DSE on the basis of monthly returns compared to benchmark returns. Risk adjusted performance measures suggested by Jenson, Treynor, Sharpe and statistical models are employed. It is found that, most of the mutual funds have performed better according to Jenson and Treynor measures but not up to the benchmark on the basis of Sharpe ratio. However, very few mutual funds are well diversified and have reduced its unique risk. The growth oriented funds have not performed better in terms of total risk and the funds are not offering advantages of diversification and professionalism to the investors. So, mutual funds cannot perform always better with their expertise and cannot beat the market.
Brac University Journal, Jan 1, 2009
Financial distress is a situation where a firm’s operating cash flows are not sufficient to satis... more Financial distress is a situation where a firm’s operating cash flows are not sufficient to satisfy current obligations and the firm is forced to take corrective actions, and a firm in financial distress may also face bankruptcy or liquidation to meet its liabilities. Financial distress can be caused by losses, dividend reduction or bankruptcy. A good way to measure the possibility of bankruptcy is to use Z score model (Altman, 1968). This paper uses the Z score model to predict risk of financial distress of Z category companies listed in Dhaka Stock Exchange (DSE). Results suggest that five of fifty three companies are out of danger while seven of those are in the gray area. Evidently, forty one of the companies are operating with high distress risk as suggested by the model result. Therefore ninety percent of the companies are suffering from financial distress risk due to very poor management capability and operating inefficiency although its reflection to the stock price is absent from the market in many instances. The Altman’s Z score, model though may not be fully applicable for companies in Bangladesh, yet proves its strong validity and correctness in predicting distressful status of the Z category companies.
BRAC University Journal, Apr 1, 2009
This paper investigates the enrollment behavior of the female students of private universities in... more This paper investigates the enrollment behavior of the female students of private universities in Bangladesh. By collecting data from a sample of 900 female students of twelve private universities classified into two strata, researchers conducted reliability test, descriptive analysis, chi-square and ANOVA tests and identified a number of key findings as to the enrollment behavior of female students. The research shows that the female students mostly prefer BBA program followed by BA in English. In the Faculty of Science and Engineering, BS in Pharmacy gets the highest preference. In Post Graduate level MBA and MA in English programs are the preferred subjects. The most important factor for the female students of one strata (top ranked private universities) during admission is the quality of teaching of the university, followed by the image of that university. On the contrary, the female students of other private universities look for lower tuition fees of their preferred program. For the both strata, parents’ decision has a significant influence. Finally, the female students of top ranked universities are highly satisfied with the image of their universities while the female students of other universities are dissatisfied with the overall performance of their universities.
Journal of Instute of Science and Technology (IST)
In every country, policymakers erect a financial safety net to make systematic banking breakdowns... more In every country, policymakers erect a financial safety net to make systematic banking breakdowns less likely and to limit the disruption and fiscal costs generated when they occurs. This safety net includes implicit and explicit deposit insurance, lender-of-last-resort facilities at the central bank, procedures for investigating and resolving bank insolvencies, strategies for regulating and supervision banks and provisions for accessing emergency assistance from multinational institution etc. In this paper authors are trying to develop an empirical model that consider both liquid and illiquid assets of investment and set as optimal regarding the returns from both the institutions and investors point of view. They also focus on the aspect of institutional liquidity and the possible crises that might be the consequences and the model to overrun this likelihood to create the financial safety net.
Journal of Management Studies
Real sector is the growth centre for the development of an economy. Bangladesh, being one of the ... more Real sector is the growth centre for the development of an economy. Bangladesh, being one of the densely populated nations in the world has been experiencing severe inadequacy of housing shortage for its citizens. Although majority of the population are segmented into the middle and low income groups, still the housing for all has been a fallacy in Bangladesh. The private sector housing real estate developers have contributed a small proportion in the national housing demand and supply gap for the last more than twenty years. Despite inadequate policy preparations, these real estate developers have been successfully making business although the middle and low income households are still untapped. With the larger proportion of people living in this income group, the private housing real estate sector has a huge scope to grow in this country. The positive notion is supported by many key indicators such as increasing house rent, inadequate and costly land, easier financing availability and more. To pave the way for the organic development of the industry, the problem of long existent inadequate financing availability at flexible terms and costs must have to be removed immediately, and wider scope has to be created for Non Resident Bangladeshis. With many other issues, this study attempts to identify the current status of the private housing real estate in Bangladesh, presents deeper insights of the critical factors for increasing its coverage, and thus finally recommends some immediate policy measures.
Teaching Documents by Suborna Barua
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Papers by Suborna Barua
In this paper, we shall highlight some proposal from financial sector to drive out the goals of sustainable developments in the light of reality. And we want to inject fresh thinking, bringing in new ideas and players from outside the financial sector.
Teaching Documents by Suborna Barua
Talks by Suborna Barua