Abstract

Private sector investment is regarded as a driving force for the rapid development of national economies worldwide. Boosting this investment requires a vibrant capital market, which converts idle private savings into productive investment. A robust capital market entails apt regulation enforced by an efficient regulator. Bangladesh has had its securities market functional for nearly fifty years. Nonetheless, the market remains in its embryonic form or at best in is infancy. The market regulator in cooperation with the successive governments has been unsuccessfully striving to restore public confidence damaged in 1996 following a devastating share scam triggered by some mature market players. The scam wrecked the bottom of the Bangladesh securities market, which had been described by an international commentator as the “Slaughter of the Innocents’.3 Governmental measures aiming at revamping the market thus far concentrate on investor ‘attraction rather than their ‘protection’ in the marketplace. This may be considered as a ‘misplaced emphasis’ when numerous recent studies suggest that providing protection to the investor is critical for the development of local securities markets.