Non-bank financial institutions (NBFIs) represent one of the most important parts of a financial system. In Bangladesh, NBFIs are new in the financial system as compared to banking financial institutions (BFIs). Starting from the IPDC in 1981, a total of 25 NBFIs are now working in .
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Non-Bank Financial Institutions (NBFIs) in Bangladesh are contributing to the economy by diversifying its investment from lease financing to housing financing, merchant banking, venture capital financing and equity financing. The aim of this paper is to show the structural development of NBFIs, performance appraisal of NBFIs and their contribution to the economy in line with GDP. This paper reveals that more participation of private firms in non-banking financial sectors makes this sector less concentrated and more competitive. This paper also finds out that cost of fund of NBFIs is decreasing over the period that indicates rising capacity of borrowing low-cost fund of NBFIs. But the reduction in the cost of the fund could not improve the much to increase the ROA & ROE due to increasing in operating expense, lack of investment opportunity and blocked money in the capital market. Further, NBFIs have high non-performing loan rate that is gradually increasing in nature. The whole industry is doing well in terms of collection of total deposits and lending credit although NPL rate is high. A highly positive correlation is found between total assets of NBFIs and GDP of Bangladesh that contents a positive contribution of NBFIs in the economy.
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