The Impact of Capital Market Failure and Investors Responses in Bangladesh: The Case of Chittagong Stock Exchange during 2010-11

Capital Market is the backbone of an economy. This study’s main object is to find out the impact of capital market failure in Bangladesh i.e. Chittagong Stock Exchange during the year 2010-11 and to find out responses of investors in CSE. While conducting this research, 140 investors are selected from CSE and out of this 120 investors responded properly, the response rate is 85 percent. A questionnaire was prepared for this study which consisted of different questions on four dimensions of investors for the investment. In this study, some statistical measures such as descriptive statistics and regression analysis were used to examine the impact of capital market failure in Bangladesh. The study discovers four dimensions such as exposure of bank, availability of authentic information, knowledge about risk management, and efficiency of Securities and Exchange Commission which had positive and significant effect on investors’ responses towards CSE. Findings also suggest that investors had unfavorable responses toward all those dimensions which led to capital market failure especially in case of CSE. This paper will help both investors and policy makers to know the impact of capital market failure and to make proper decision to manage and invest in future to the capital market in Bangladesh.