Demutualization: Pros and Cons for Dhaka Stock Exchange (DSE)

Abstract

The purpose of this study is to examine the implications of demutualization for Dhaka Stock Exchange (DSE). And this is done by examining the existing literature for the stock exchanges that have already been demutualised. The result of the study indicates that all benefits that go with demutualization are not applicable for Bangladesh. Rather the benefits are contingent upon some factors unique to Bangladesh. So in the process of demutualization the authorities concerned should focus on those factors from which optimum benefits can be derived. However, demutualization is not without risk. So along with benefits risk should be focused on so that appropriate policy can be formed that will ensure successful implementation of demutualization. This study is important to investors, academics and policy makers as it demonstrates what benefits demutualization will bring and what challenges it will create. Since demutualization is a very new concept in Bangladesh, the study extends the literature by demonstrating its pros and cons in the context of Bangladesh.

Key Words: Demutualization, Mutual Organization, Corporate Governance.