Stock Market Crash in Bangladesh: The Moneymaking Psychology of Domestic Investors

Md. Tahidur Rahman; Syed Zabid Hossain; Md. Habibullah

doi:doi:10.11648/j.ajtab.20170303.12

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Stock Market Crash in Bangladesh: The Moneymaking Psychology of Domestic Investors

Md. Tahidur Rahman, Syed Zabid Hossain, Md. Habibullah

Published in American Journal of Theoretical and Applied Business (Volume 3, Issue 3)

Received: 9 July 2017 Accepted: 23 August 2017 Published: 12 September 2017

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Abstract

After the cruel crash in 1996 Bangladesh stock market had started growing from 2006 due to listing of a few profitable government entities and Multinational Companies (MNCs). Together with individual investors nearly all commercial banks involved themselves intensely in stock market. Step by step, the bullish market transformed into a bubble and on December 05, 2010, the Dhaka Stock Exchange General Index (DGEN) reached at the record high of 8918.5, almost 5.6 times higher than December 2006. Concurrently, market capitalization and turnover increased by 11.1 times and 61.7 times respectively. However, when the bubble burst on December 19, 2010 the DGEN witnessed its biggest one day fall of 6.7 percent and since then the market has become bearish with almost no positive movement of stock prices. Against this backdrop, this study identified four moneymaking psychologies of domestic investors specifically greed, envy, speculation, and overconfidence that contributed to the formation of bubble, while four loss-minimizing and capital-protecting psychologies such as panic, frustration, lack of self-confidence, and distrust caused the bubble to burst. The bankers, brokers and manipulators were the biggest gainers, whereas the most unaware and greedy small investors encountered heavy loss. The market will be less volatile, more mature, and sustainable when most of the investors will be conscious about the potential risks and returns and the regulators will play their part sincerely and efficiently.

Published in	American Journal of Theoretical and Applied Business (Volume 3, Issue 3)
DOI	10.11648/j.ajtab.20170303.12
Page(s)	43-53
Creative Commons	This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.
Copyright	Copyright © The Author(s), 2024. Published by Science Publishing Group

Keywords

Dhaka Stock Exchange, Stock Market Crush and Bubble, Moneymaking Psychology

References

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APA Style

Md. Tahidur Rahman, Syed Zabid Hossain, Md. Habibullah. (2017). Stock Market Crash in Bangladesh: The Moneymaking Psychology of Domestic Investors. American Journal of Theoretical and Applied Business, 3(3), 43-53. https://doi.org/10.11648/j.ajtab.20170303.12

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ACS Style

Md. Tahidur Rahman; Syed Zabid Hossain; Md. Habibullah. Stock Market Crash in Bangladesh: The Moneymaking Psychology of Domestic Investors. Am. J. Theor. Appl. Bus. 2017, 3(3), 43-53. doi: 10.11648/j.ajtab.20170303.12

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AMA Style

Md. Tahidur Rahman, Syed Zabid Hossain, Md. Habibullah. Stock Market Crash in Bangladesh: The Moneymaking Psychology of Domestic Investors. Am J Theor Appl Bus. 2017;3(3):43-53. doi: 10.11648/j.ajtab.20170303.12

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@article{10.11648/j.ajtab.20170303.12,
  author = {Md. Tahidur Rahman and Syed Zabid Hossain and Md. Habibullah},
  title = {Stock Market Crash in Bangladesh: The Moneymaking Psychology of Domestic Investors},
  journal = {American Journal of Theoretical and Applied Business},
  volume = {3},
  number = {3},
  pages = {43-53},
  doi = {10.11648/j.ajtab.20170303.12},
  url = {https://doi.org/10.11648/j.ajtab.20170303.12},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ajtab.20170303.12},
  abstract = {After the cruel crash in 1996 Bangladesh stock market had started growing from 2006 due to listing of a few profitable government entities and Multinational Companies (MNCs). Together with individual investors nearly all commercial banks involved themselves intensely in stock market. Step by step, the bullish market transformed into a bubble and on December 05, 2010, the Dhaka Stock Exchange General Index (DGEN) reached at the record high of 8918.5, almost 5.6 times higher than December 2006. Concurrently, market capitalization and turnover increased by 11.1 times and 61.7 times respectively. However, when the bubble burst on December 19, 2010 the DGEN witnessed its biggest one day fall of 6.7 percent and since then the market has become bearish with almost no positive movement of stock prices. Against this backdrop, this study identified four moneymaking psychologies of domestic investors specifically greed, envy, speculation, and overconfidence that contributed to the formation of bubble, while four loss-minimizing and capital-protecting psychologies such as panic, frustration, lack of self-confidence, and distrust caused the bubble to burst. The bankers, brokers and manipulators were the biggest gainers, whereas the most unaware and greedy small investors encountered heavy loss. The market will be less volatile, more mature, and sustainable when most of the investors will be conscious about the potential risks and returns and the regulators will play their part sincerely and efficiently.},
 year = {2017}
}

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TY  - JOUR
T1  - Stock Market Crash in Bangladesh: The Moneymaking Psychology of Domestic Investors
AU  - Md. Tahidur Rahman
AU  - Syed Zabid Hossain
AU  - Md. Habibullah
Y1  - 2017/09/12
PY  - 2017
N1  - https://doi.org/10.11648/j.ajtab.20170303.12
DO  - 10.11648/j.ajtab.20170303.12
T2  - American Journal of Theoretical and Applied Business
JF  - American Journal of Theoretical and Applied Business
JO  - American Journal of Theoretical and Applied Business
SP  - 43
EP  - 53
PB  - Science Publishing Group
SN  - 2469-7842
UR  - https://doi.org/10.11648/j.ajtab.20170303.12
AB  - After the cruel crash in 1996 Bangladesh stock market had started growing from 2006 due to listing of a few profitable government entities and Multinational Companies (MNCs). Together with individual investors nearly all commercial banks involved themselves intensely in stock market. Step by step, the bullish market transformed into a bubble and on December 05, 2010, the Dhaka Stock Exchange General Index (DGEN) reached at the record high of 8918.5, almost 5.6 times higher than December 2006. Concurrently, market capitalization and turnover increased by 11.1 times and 61.7 times respectively. However, when the bubble burst on December 19, 2010 the DGEN witnessed its biggest one day fall of 6.7 percent and since then the market has become bearish with almost no positive movement of stock prices. Against this backdrop, this study identified four moneymaking psychologies of domestic investors specifically greed, envy, speculation, and overconfidence that contributed to the formation of bubble, while four loss-minimizing and capital-protecting psychologies such as panic, frustration, lack of self-confidence, and distrust caused the bubble to burst. The bankers, brokers and manipulators were the biggest gainers, whereas the most unaware and greedy small investors encountered heavy loss. The market will be less volatile, more mature, and sustainable when most of the investors will be conscious about the potential risks and returns and the regulators will play their part sincerely and efficiently.
VL  - 3
IS  - 3
ER  -

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Author Information

Md. Tahidur Rahman

Department of Business Administration, EXIM Bank Agricultural University Bangladesh, Chapainawabganj, Bangladesh
Syed Zabid Hossain

Departments of Accounting and Information Systems, University of Rajshahi, Rajshahi, Bangladesh
Md. Habibullah

Bangladesh Institute of Capital Market, Dhaka, Bangladesh

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APA Style

Md. Tahidur Rahman, Syed Zabid Hossain, Md. Habibullah. (2017). Stock Market Crash in Bangladesh: The Moneymaking Psychology of Domestic Investors. American Journal of Theoretical and Applied Business, 3(3), 43-53. https://doi.org/10.11648/j.ajtab.20170303.12

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ACS Style

Md. Tahidur Rahman; Syed Zabid Hossain; Md. Habibullah. Stock Market Crash in Bangladesh: The Moneymaking Psychology of Domestic Investors. Am. J. Theor. Appl. Bus. 2017, 3(3), 43-53. doi: 10.11648/j.ajtab.20170303.12

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AMA Style

Md. Tahidur Rahman, Syed Zabid Hossain, Md. Habibullah. Stock Market Crash in Bangladesh: The Moneymaking Psychology of Domestic Investors. Am J Theor Appl Bus. 2017;3(3):43-53. doi: 10.11648/j.ajtab.20170303.12

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@article{10.11648/j.ajtab.20170303.12,
  author = {Md. Tahidur Rahman and Syed Zabid Hossain and Md. Habibullah},
  title = {Stock Market Crash in Bangladesh: The Moneymaking Psychology of Domestic Investors},
  journal = {American Journal of Theoretical and Applied Business},
  volume = {3},
  number = {3},
  pages = {43-53},
  doi = {10.11648/j.ajtab.20170303.12},
  url = {https://doi.org/10.11648/j.ajtab.20170303.12},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ajtab.20170303.12},
  abstract = {After the cruel crash in 1996 Bangladesh stock market had started growing from 2006 due to listing of a few profitable government entities and Multinational Companies (MNCs). Together with individual investors nearly all commercial banks involved themselves intensely in stock market. Step by step, the bullish market transformed into a bubble and on December 05, 2010, the Dhaka Stock Exchange General Index (DGEN) reached at the record high of 8918.5, almost 5.6 times higher than December 2006. Concurrently, market capitalization and turnover increased by 11.1 times and 61.7 times respectively. However, when the bubble burst on December 19, 2010 the DGEN witnessed its biggest one day fall of 6.7 percent and since then the market has become bearish with almost no positive movement of stock prices. Against this backdrop, this study identified four moneymaking psychologies of domestic investors specifically greed, envy, speculation, and overconfidence that contributed to the formation of bubble, while four loss-minimizing and capital-protecting psychologies such as panic, frustration, lack of self-confidence, and distrust caused the bubble to burst. The bankers, brokers and manipulators were the biggest gainers, whereas the most unaware and greedy small investors encountered heavy loss. The market will be less volatile, more mature, and sustainable when most of the investors will be conscious about the potential risks and returns and the regulators will play their part sincerely and efficiently.},
 year = {2017}
}

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TY  - JOUR
T1  - Stock Market Crash in Bangladesh: The Moneymaking Psychology of Domestic Investors
AU  - Md. Tahidur Rahman
AU  - Syed Zabid Hossain
AU  - Md. Habibullah
Y1  - 2017/09/12
PY  - 2017
N1  - https://doi.org/10.11648/j.ajtab.20170303.12
DO  - 10.11648/j.ajtab.20170303.12
T2  - American Journal of Theoretical and Applied Business
JF  - American Journal of Theoretical and Applied Business
JO  - American Journal of Theoretical and Applied Business
SP  - 43
EP  - 53
PB  - Science Publishing Group
SN  - 2469-7842
UR  - https://doi.org/10.11648/j.ajtab.20170303.12
AB  - After the cruel crash in 1996 Bangladesh stock market had started growing from 2006 due to listing of a few profitable government entities and Multinational Companies (MNCs). Together with individual investors nearly all commercial banks involved themselves intensely in stock market. Step by step, the bullish market transformed into a bubble and on December 05, 2010, the Dhaka Stock Exchange General Index (DGEN) reached at the record high of 8918.5, almost 5.6 times higher than December 2006. Concurrently, market capitalization and turnover increased by 11.1 times and 61.7 times respectively. However, when the bubble burst on December 19, 2010 the DGEN witnessed its biggest one day fall of 6.7 percent and since then the market has become bearish with almost no positive movement of stock prices. Against this backdrop, this study identified four moneymaking psychologies of domestic investors specifically greed, envy, speculation, and overconfidence that contributed to the formation of bubble, while four loss-minimizing and capital-protecting psychologies such as panic, frustration, lack of self-confidence, and distrust caused the bubble to burst. The bankers, brokers and manipulators were the biggest gainers, whereas the most unaware and greedy small investors encountered heavy loss. The market will be less volatile, more mature, and sustainable when most of the investors will be conscious about the potential risks and returns and the regulators will play their part sincerely and efficiently.
VL  - 3
IS  - 3
ER  -

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