Structured Finance: Is Bangladesh Lagging Behind?

Abstract

In today's world structured financing has become a very important and popular tool in trade, capital market and project financing. When more than one entity is involved in the financing process then it is known as structured financing. Though few projects in Bangladesh has been funded by this financing tool but the market for structured financing products has not yet been developed. If structured financing products can be properly utilized, Bangladesh will be able to solve most of the funding crisis of its infrustructural development sector. In this paper, the current status of Bangladesh in structured financing has been identified. Though some of the critics goes to the complex and difficult-to-value structured finance products for the world’s recent financial crisis, if this method of financing can be successfully implemented the typical drawbacks of this financing technique can be solved.

Keywords: Structured finance, SPV/SPE, synthetic, trigger events, Mortgage Backed Securities (MBS), Asset Backed Security (ABS), Tranching, Public Private Partnership (PPP)