In the global economy, the stock market plays a very important role as it is considered one of the most crucial microstructural elements in the development of liquidity in the financial sector. Recently, the total market capitalization of the global stock market has more than doubled over the past 13 years. The total value has increased by almost 133% since 2003 (Iskyan, 2016) and the trend of people investing in the stock market has been exceeded. But this path to great stock market popularity is not easy due to different shocks and volatilities. Additionally, historically, stock market volatility has become approximately 20% in a year and 5.8% in a month (Ibbotson, 2011). In this situation, investors often consider stock market liquidity as the basis for investing and observing company performance, because it has a significant impact on listed companies (Wuyts, 2017). Additionally, in this volatile economic environment, it has become so difficult to determine the exact value of a company and investors are often so confused that they invest in the wrong stocks. This is why investors and economists around the world are trying to find a way that can make sense of these consequences on volatility, shocks, liquidity and company value. Under such conditions, stock market liquidity has become one of the most important goals of investors in determining the value of companies. The marketability or liquidity of a stock plays a central role in the valuation of companies, as it is the lifeblood of the securities market from the perspective of investors, traders and other parties (Ali, 2016). The higher the liquidity or yield, the higher the interest of investors in investing in that security. Akter and Mahmud (2014) also pointed out that the two crucial issues in managing an organization are liquidity and profitability. Liquidity refers to the ease with which an asset can be converted into cash without losing its value or incurring transaction costs (Dalgaard, 2009). On the other hand, stock market liquidity refers to the ease with which stocks can be traded at a price close to the current market price, with the word ease being replaced by speed and price (European Systematic Risk Committee [ESRB ], 2016). It is an important indicator of stock market development as it indicates how the market contributes to improving the allocation of capital and thereby enhancing long-term economic growth prospects (Khaliq, 2013). Say no to plagiarism. Get a tailor-made essay on “Why Violent Video Games Should Not Be Banned”? Get the original essay Although Bangladesh is an emerging economy, its stock markets are not very efficient and stable compared to those of developed countries. According to World Bank statistics (2017), the total value of stock trading to GDP of Bangladesh is 1.86% in 2000, 0.17% in 2004, 3.02% in 2010 and 0.38%. in 2014, which indicates the unstable behavior of the market. In this volatile situation, determining the liquidity and value of companies listed on these markets is also a challenge. On the other hand, much research regarding stock liquidity and firm value has produced controversial results. Some have found a positive relationship, others negative or even insignificant, such as Fang, Neo and Tice (2009) found that increasing the decimalization of liquidity has a positive effect on company performance because it puts the more information available to investors. Sidhu (2016) found a positive relationshipbetween Amivest's liquidity and Tobin's Q. Zhang, Huang, and Chen (2017) and Ali (2016) also found the same result as Zhang et al. (2017) addressed an exogenous shock to see the impact on liquidity. Moreover, there is also a close relationship between firm value, inventory liquidity and firm size, studied by Ban (1981) and Amihud and Mendleson (1986). This means that not only does risk matter in the market, but other factors such as liquidity, company profitability, social responsibility, company size and corporate governance also affect the market .overall performance (Moeljadi, 2014); (Jonathan, 2003). Purwohandoko (2017) and Putu, Moeljadi and Djazuli (2014) found that there is a positive relationship between firm size and value. On the other hand, according to Setiadharma and Machali (2017) and Mule, Mukras and Nzioka (2015), the size of companies is not a significant variable to explain the value of the company, because the size is linked to the asset and, at any time, the asset may not be the same. quality asset which contributes to increasing the value of companies. From the above discussion it is clear that liquidity and business value is an important fact and it is still not introduced in the perspective of Bangladesh and as a culture, value, way of behavior, monetary policy. and the fiscal policy and political situation are different in Bangladesh, the findings of other articles may not be applicable from the perspective of Bangladesh. Additionally, none of the articles focused on both banks and NBFIs. So researchers tried to focus on Sidhu (2016) and observe the impact of liquidity on firm value from the perspective of Bangladesh by introducing banking and non-banking financial institutions (NBFIs) and comparing the results of the analysis of these companies in order to meet their needs. the gap. In the DSE, almost 16.81% shares are dominated by banking and non-banking financial institutions, where this dominance makes financial institutions more vulnerable on the one hand and also highlights the crucial importance of the sector in the allocation of resources and the mobilization of the economy on the other hand (Khatun, 2017). After this part, the researchers focused on the literature review, the methodology and then the analysis and results part. Research Objectives The main objective of this article is to observe the liquidity of the stock market and its impact on the value of companies. To achieve these objectives, the researchers introduced other specific objectives: - Determine the liquidity of the shares of the companies in the sample. - Examine the effect of stock liquidity on the value of companies (banks and NBFIs). - Show a comparative picture of both Bangladesh Bank and NBFI in terms of impact of liquidity on business value. Literature Review There are very few studies focusing on stock market liquidity and its impact on firm value worldwide, where most of the papers found controversial results and some also introduced exogenous shock to determine the effect of liquidity on company value. Fang et al. (2009) attempted to show the causal relationship between stock market liquidity and firm performance by exploring an exogenous shock and observed the volatility of firm performance measured by the market value to book value ratio where it was found that increasing liquidity decimalization has a positive effect. on company performance because it makes more information available to investors. On the other hand, theDynamic trading, analyst coverage, investor overreaction and discount rate effect have no effect on company value. Moreover, stock liquidity has a direct chronological relationship with performance and improves the operational performance of the company. Sidhu (2016) examined the relationship between stock market liquidity and firm value on Indian manufacturing firm and random effects panel regression was carried out to analyze the relationship where he found a positive relationship between liquidity from Amivest and the Q from Tobin. The researcher also found a positive relationship between company size, age and value. The article by Zhang et al. (2017) used China's non-tradable stock reform as a quasi-natural experiment to test the effect of stock liquidity on firm value by dealing with a positive exogenous liquidity shock and found a positive relationship. Ali, Mahmud, and Lima (2016) explored the effect of stock liquidity on firm value in Iraq by considering 65 companies listed on the Iraqi Stock Exchange and found that firms with liquid stocks have better value of business, as measured by Tobin's Q. a function of the value of the company. This result also holds even when introducing a firm fixed effect, controlling for idiosyncratic risk and controlling for endogenous risk. Banz (1981), in his article, attempted to examine the relationship between stock return and market value of common stocks where it was found that the size effect is not linear with market value. Where Amihud and Mendleson (1986) found a strong relationship between firm value, stock liquidity and firm size, meaning that not only risk matters in the market but also other factors such as liquidity, profitability of the company, social responsibility, size of the company, corporate governance. innovation capacity can also affect overall performance (Moeljadi, 2014); (Jonathan, 2003). Kausar, Nazir, and Butt (2014) focused on determining which capital structure has the greatest value for firms by introducing multiple regression and panel regression focusing on 197 firms from Pakistan where they found a relationship negative between the capital structure represented. by total liabilities divided by total equity and company value. On the other hand, Ali (2016) and Sumiati and Manihuruk (2016) found an insignificant relationship between these two variables. Nguyen, Duong, and Singh (2016) examine stock market liquidity, measured by Tobin's Q where it is represented by three components. namely operating profit to prices, leverage, operating profit to assets and firm value by treating broker anonymity as an exogenous shock where they found that the Increased liquidity around the shock leads to an increase in firm value. On the other hand, Arian, Galdipur and Kiamehr (2014) tried to focus on determining the impact of the gap between the prices of the supply and demand index and the volume of the figure d business on Tobin's Q at Tehran Stock Exchange using Pearson correlation and multiple regression analysis where they found that there was There is no statistically significant relationship between liquidity and the value of companies. On the other hand, turnover volume and company value have a direct and significant relationship. Some research papers have been carried out on stock liquidity and stock performance.businesses in Bangladesh. Among them, Uddin and Moniruzzaman (2017) examined the relationship between liquidity and profitability using the variables CCC, LR, CR, TCR, ROA, ICP and ROE by introducing Pearson's correlation where they found that there is no had no statistically significant relationship between liquidity and profitability in the textile sector. sector in Bangladesh. From the above discussion, it is clear that although much research has been done on stock liquidity and firm value, none of the Bangladeshi papers address the issue. Not only are most of the researches either based on different sectors like manufacturing or textiles or on the whole stock market companies where there are very few articles that have worked on the banking sector but none of them took into account both banks and NBFIs. work done on the banking sector is based on other countries. In Bangladesh, most works have focused on stock liquidity and firm performance, but none have considered the term value. Thus, researchers find a gap here to analyze whether there is really an effect of liquidity on the business value of these institutions. Methodology Sample selection and data collection This is explanatory research in terms of applied objectives, conducted on the basis of secondary data. The research is essentially quantitative research because the objectives and results of the research require quantitative analysis for evaluation, analysis and obtaining the optimal and expected result. Here the direct objective of the research is to determine the liquidity of stock market and address its impact on firm value by focusing on banking and non-banking financial institutions of Bangladesh and also to observe the impact of certain control variables on companies. ' value. To visualize the overall picture, researchers have used statistical tests like descriptive statistics, fixed effects regression which require quantitative rather than qualitative data and these tests are used because most of the research papers (Sidhu, 2016) and (Ali, 2016) that the researchers followed on the subject carried out these tests. Moreover, to assess the impact of liquidity on the value of companies, all these tests are also necessary. To achieve the research objectives, the target population is defined as the entire group of companies that the researchers are interested in, i.e. all banks and non-bank financial institutions in the country listed in the EHR. There are 30 banks and 23 non-bank financial institutions listed in the EHR. Among them, data of 27 banks and 11 financial institutions are available from 2007 to 2016. Thus, the sample size is 270 annual reports for banks, 110 annual reports for NBFIs and stock market data for the year 2007-2016, where a balanced panel of data was created for the period considered. This sample size is supported by Sidhu (2016), where the researcher used 147 financial reports and the stock market data was for the period 2009 to 2012. Here, the researchers did not consider other banks and financial institutions non-banks, which are also listed. to the DSE, due to unavailability of data and listing of companies after 2007. Only DSE was taken into account because most of the companies listed on the CSE are also listed on the DSE and the DSE is the most common stock market largest and best known in the world from Bangladesh. other sectors are excluded because in terms of economic effect and growth prospects, banking and non-banking institutions.