Abstract:
This thesis conducts a comprehensive analysis of the impacts of Initial Public Offerings (IPOs)
on the development of the capital market in Bangladesh, which is recognized as one of the
fastest-growing economies in South Asia. In this context, the increasing capital needs of
entrepreneurs are primarily met by state-owned and private commercial banks, as well as non
banking financial institutions, due to the underdeveloped nature of the stock market. Bank
financing is influenced by monetary policies, particularly the bank rates set annually by the
central bank. While some studies highlight the necessity of strengthening the debt and equity
securities market to support Bangladesh's rapid economic growth, there are ongoing debates
about the extent to which the capital market contributes to the development process by providing
alternative financing sources for entrepreneurs through public and private offerings. To bridge
this understanding gap, I examine the impacts of Initial Public Offerings on the development of
Bangladesh's capital market through a meticulous examination of primary and secondary data
sources, including closed-end questionnaire, IPO Prospectus and regulatory documents from
different stakeholders of the capital market i.e., Ministry of Finance, BSEC, BB, DSE, CSE,
published articles, daily newspapers etc. and use annual data from 1994 to 2023. Employing
multiple regression analysis, I find that IPO financing, unemployment rate, foreign portfolio
trade, and DSE Broad Index significantly and positively influence the Market Capitalization to
GDP ratio of the capital market of Bangladesh. Notably, foreign portfolio trade exerts the largest
effect on the Market Capitalization to GDP ratio, followed by IPO financing, unemployment rate
and DSE Broad Index. The findings underscore the need to encourage more quality IPO
issuances by addressing the barriers that deter large companies, including multinational
corporations and state-owned entities, from pursuing public financing. Additionally, increasing
the size of issuances and ensuring the proper utilization of IPO proceeds are essential steps to
further develop the capital market of Bangladesh.
