JOURNAL OF THE INSTITUTE OF BANKERS BANGLADESH-Vol 58 Number-2, Published December-2011

Published Online: December 1st, 2011 || Published in Print: November 25th, 2011

Abstract

Hall-Mark's Tk.40 billion scam has drawn our attention recently leading to two conjectures. One of these conjectures is that this may be attributed to the systematic flaws inherent in the process and procedure for local LC facility and inland bill purchase that entails credit risk and leads to failure of financial system. The other conjecture is that this scam may be outcome of the poor governance of bank management. In other words, it poses the question, is it bad loan or bad governance that matters? The first article of this issue aims at investigating the long run relationship between remittance and economic growth in Bangladesh using Johansen co- integration approach and vector error correction technique. The remittance in Bangladesh has emerged as a key driver of economic growth and poverty reduction. In an emerging economy like Bangladesh, remittances appear to alleviate credit constraints and stimulate economic growth in the long run. The major finding of this study is that there exists a co-integrating relationship between remittance and GDP. The long run response between remittance and GDP is 5.27 per cent implying that for every Tk. 100 increase in remittance, nominal GDP grew by Tk. 527 in the long run through remittance multiplier. In the partial short-run adjustment of the deviation of long run equilibrium, VEC coefficients of GDP and remittance are adjusting 3 per cent and 4 per cent respectively by every year to move towards the equilibrium level. Granger causality shows that there exists bidirectional causal relationship between remittance and GDP. The results indicate that remittances play a key role in propelling long run economic growth and therefore it draws greater attention to the policymakers in designing macroeconomic policies of the judicious use of remittances towards enhancing long-run sustainable economic growth. The second article intends to explore the contour the connotation of credit risk in the parlance of bankers and what the contemporary principles are being followed by them in order for management of credit risk in their operations. The credit management principles are to a great extent well defined rules encouraging easy compliance and plug all loopholes so that there do not arise any conflict of interest among the shareholders, management and depositors of the bank while at simultaneity the economy of the country is not deprived of required credit to wheel its normal pace. The guidelines are meticulously developed and fanatically adhered to. As such, it helped the banking system to get rid of defaulted loan and keep it at the normal level. The last and final note of this issue is concerned with the philosophy of Rabindranath Tagore as a social reformer on the innovativeness and improvement of agriculture and rural development. Unlike other landlords, Tagore extended a helping hand to the distressed farmers and came up with ideas on indigenous development strategies in the areas of cooperatives, banking, agricultural technology and so on. Tagore was very keen to introduce modern technology and equipment in farming. He introduced crop rotation and crop diversification in agriculture production. He imported mechanized ploughs and improved seeds to enhance agricultural productivity. He brought to Partisan seven mechanized ploughs from Kelkata, improved seeds of maize from the USA and fine paddy from Madras. Tagore introduced small cooperative initiatives both in Shilaidaha and Partisan to finance rural development activities.