Impact of Everything But Arms (EBA) on the Dhaka Stock Exchange

Md. Rayhanul Islam and Huang Xiaoling
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Md. Rayhanul Islam: Deputy General Manager, Bangladesh Bank, Dhaka.
Huang Xiaoling: School of International Trade and Economics, University of International Business and Economics (UIBE), Beijing, China.

International Journal of Science and Business, 2022, vol. 7, issue 1, 34-52

Abstract: This research has contributed to the impact and association of Everything But Arms Scheme, Export to EU market from Bangladesh, Foreign Exchange Reserve of Bangladesh and Dhaka Stock Exchange. Here, data are secondary and collected from the authentic sources such as World Bank, Bangladesh Bank and Dhaka Stock Exchange. Export of Bangladesh of the year 2000 and 2015 of 171 destinations are used as Panel data whereas time series data of from January, 1986 to December, 2017. Difference-in-Difference (DID) and Error Correction Econometrics Methods have been used for analyzing the panel and time series data respectively. Later on, impact of Export via Foreign Exchange Reserve on Market Capitalization of Stock Exchange is checked. Appropriate econometric model has been selected based on Unit Root and Gregory and Hansen Test. Justification the accuracy of result has also been checked using econometric test like Heteroskedasticity, Multicollinearity, Durbin-Watson, Breusch-Godfrey LM, White and Cumulative Summation. Reliability analysis shows that EBA is responsible for enhancement of 97% export to EU market which raised 58% of export as a whole. This enhancement is associated with Foreign Exchange Reserve by 23%; the contribution of EBA on GDP and employment is 7.28% and 2.66 million respectively. This research shows the duration of adjustment factor for return to equilibrium which is 10.30% in a month; Foreign Exchange Reserve has positive impact on the capitalization of DSE in long run. The overall impact of Everything But Arms (EBA) on Market Capitalization of Dhaka Stock Exchange is 72.18% in the same direction.

Keywords: Everything But Arms; Least Developed Countries; Most Favored Nations; Difference-in-Difference; Error Correction Model; Ready-Made Garments; Multi-Fiber Arrangements (search for similar items in EconPapers)
Date: 2022
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