Margin Requirements and Stock Market Volatility in Bangladesh


Affiliations

  • Independent University, Department of Economics, School of Business, Dhaka, Bangladesh
  • Dhaka Stock Exchange Limited, Development & Information Department, Dhaka, India

Abstract

Officially margin requirements in bourses in Bangladesh were initiated on April 28, 1999, to limit the amount of credit available for the purpose of buying stocks. The goal of this paper is to measure the impact of changing margin requirement on stock returns' volatility in Dhaka Stock Exchange (DSE). The impact of margin requirement on stock price volatility has been extensively studied with mixed and ambiguous results. Using daily stock returns, we found mixed evidence that SEC's margin requirements have significant impact on market volatility in DSE.

Keywords

Margin, Requirements, Volatility, Stock Market.

Subject Discipline

Marketing management

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