In the world economy the stock market plays a very important role as it is considered one of the most crucial microstructural elements for the evolution of the liquidity of the financial sector. Recently the total market capitalization of the world stock market has become more than double in the last 13 years. The total value has increased by almost 133% since 2003 (Iskyan, 2016), and the tendency of people to invest in the stock market has been overwhelmed. But this path to gaining huge stock market popularity is not smooth due to various shocks and volatility. Not only that, historically the volatility of the stock market 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 a basis for investing and observing company performance as it has important implications for listed companies (Wuyts, 2017). Furthermore, in this volatile economic condition it has become so difficult to determine the exact value of a company and investors are often so confused that they invest in wrong stocks and that is why investors and economists all over the world are trying to determine a way that can make sense of volatility, shocks, liquidity consequences and the puzzle of corporate value. Under such conditions, stock market liquidity has become one of the most important objectives of investors to determine the value of companies. The marketability or liquidity of a security plays a central role in the valuation of companies because it is the life force of the securities market from the perspective of investors, traders and other parties (Ali, 2016). The greater the liquidity or yield, the greater the interest investors will have in investing in that security. Akter and Mahmud (2014) also highlighted that the two crucial issues in organizational management are liquidity and profitability. Liquidity refers to the ease with which an asset can be converted into cash without losing its value or incurring any 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, where the word ease is replaced by speed and price (European Systematic Risk Board [ESRB], 2016). It is an important indicator of stock market development because it indicates how the market helps improve capital allocation and thus improve long-term economic growth prospects (Khaliq, 2013). Say no to plagiarism. Get a tailor-made essay on "Why Violent Video Games Shouldn't Be Banned"? Get 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 market traded to GDP for Bangladesh is 1.86% in 2000, 0.17% in 2004, 3.02% in 2010 and 0.38% in 2014, which indicates the restless behavior of the market. In this uneasy situation, determining the liquidity and value of companies listed in these markets is also a challenging issue. On the other hand, much research regarding stock liquidity and company value has found controversial results. Some found a positive relationship, others negative, still others insignificant, so much so that Fang, Neo, and Tice (2009) found that increasing liquidity decimalization has a positive effect on firm performance as it makes more information available to investors. Sidhu (2016) found a positive relationship between liquidityby Amivest and Q. Tobin. Zhang, Huang, and Chen (2017) and also Ali (2016) found the same result where Zhang et al. (2017) addressed an exogenous shock to see the impact on liquidity. Furthermore, there is also a strong relationship between firm value, stock liquidity and firm size, which is explored by Ban (1981) and Amihud and Mendleson (1986). This means that not only risk matters in the market, but also other factors such as liquidity, corporate profitability, social responsibility, company size, corporate governance influence the overall performance (Moeljadi, 2014); (Jonathan, 2003). Purwohandoko (2017) and Putu, Moeljadi, and Djazuli (2014) found that there is a positive relationship between the size of firms and their 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 companies as the size is related to the asset and at any time the The asset may not be the primary asset. quality asset that contributes to increasing the value of companies. From the above discussion it is clear that liquidity and value of enterprises are an important fact and are not yet introduced in the perspective of Bangladesh and as culture, value, way of behavior, monetary policy and fiscal policy, the political conditions are different in Bangladesh, the findings of other papers may not be applicable in Bangladesh perspective. Not only that, no study focused on both banks and NBFIs. Then the researchers tried to focus on Sidhu (2016) and tried to observe the impact of liquidity on the value of companies in the perspective of Bangladesh by introducing banking and non-banking financial institutions (NBFIs) and making a comparison between the results of analysis of these companies in order to meet the gap. In the DSE almost 16.81% of the share is dominated by banking and non-banking financial institutions, where this dominant position makes financial institutions more vulnerable on one hand and also highlights the crucial importance of the sector in resource allocation and mobilization of the economy on the other (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 some other specific objectives: - Determine the liquidity of the shares of the sample companies. - Examine the effect of stock liquidity on the value of firms (banks and NBFIs). - Show a comparative picture of both Bank and NBFI of Bangladesh in terms of impact of liquidity on business value. Literature Review There are very few studies that have focused on stock market liquidity and its impact on firm value across the world, where most of the studies found controversial results and some even introduced an exogenous shock to determine the The effect of liquidity on the value of companies. Fang et al. (2009) attempted to show the causal relationship between stock market liquidity and firm performance by exploring an exogenous shock and observed volatility in firm performance measured by the ratio of market value to book value, where it was found that the increase in the decimalization of liquidity has a positive effect on the performance of companies as it makes more information available to investors. On the other hand, momentum trading, analyst coverage, overreaction ofinvestors and the effect on the discount rate have no effect on the value of firms. Furthermore, stock liquidity has a direct time-series relationship with return and improves the operating performance of the company. Sidhu (2016) examined the relationship between stock market liquidity and corporate value on Indian manufacturing company and a random effects panel regression was performed to analyze the relationship where a positive relationship was found between stock liquidity Amivest and Tobin's Q. The researcher also found a positive relationship between size, age and value of companies. The article by Zhang et al. (2017) used non-tradable stock reform in China as a quasi-natural experiment to test the effect of stock liquidity on firm value when facing an exogenous positive liquidity shock and found a positive relationship. Ali, Mahmud, and Lima (2016) explored the effect of stock liquidity on firm value in Iraq considering 65 companies listed on the Iraq Stock Exchange and found that firms with liquid shares have better firm value measured by Tobin's Q as a function of firm value. This result also holds when the fixed fixed effect, idiosyncratic risk control and endogenous risk control are introduced. Banz (1981), in his article attempted to examine the relationship between stock return and market value of ordinary shares where it is 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, this means that not only risk matters in the market, but also other factors such as liquidity, firm profitability, social responsibility, the 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 greater value for companies by introducing multiple regression and panel regression focusing on 197 companies in Pakistan where they found a negative relationship between the capital structure represented by total liabilities divided by total capital and business 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 this is represented by three components namely operating income in terms of price, financial leverage, operating income in terms of assets and firm value, addressing broker anonymity as an exogenous shock where they found that the increase in 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 supply and demand index prices and turnover volume on Tobin's Q in the Tehran stock exchange through the correlation of Pearson and multiple regression analysis where they discovered that there is There is no statistically significant relationship between liquidity and company value. On the other hand, the volume of turnover and the value of enterprises have a direct and significant relationship. Some research papers have been conducted on stock liquidity and company performance in Bangladesh. Among these, Uddin and Moniruzzaman (2017) examined the relationship between liquidity and profitability using the variables CCC, LR, CR, TCR, ROA, ICP and ROE introducing the Pearson correlation where theyfound that there is no statistically significant relationship between liquidity and profitability in the textile sector in Bangladesh. From the above discussion it is clear that although many research works have been conducted on stock liquidity and enterprise value, none of the Bangladeshi papers addresses the issue. Not only are most of the researches based on different sectors like manufacturing or textiles or consider entire stock market companies where there are very few articles that have worked based on banking sector but none of them have considered both banks and NBFIs, as well as the work done on the banking sector is based on other countries. In Bangladesh most of the work has addressed the issue of stock liquidity and firm performance, but no one has considered the term value. So, researchers here find a gap to analyze whether there is indeed any effect of liquidity on the value of these institutions and companies. MethodologySample selection and data collectionThis is an explanatory research in terms of applied purposes, conducted on the basis of secondary data. The research is basically a quantitative research as 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 the stock market and address its impact on the firm's value by focusing on the banking and non-banking financial institutions of Bangladesh and also observe the impact of some control variables on the firms' value. To see the big picture, researchers have used some statistical tests such as 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 researchers have been following on the topic have performed these tests. Not only that, to address the impact of liquidity on the value of businesses, it is also necessary to carry out all these tests. To achieve the research objectives, the target population is defined as the entire group of companies that the researchers are interested in, which means all banks and non-bank financial institutions in the country listed in the DSE. There are 30 banks and 23 non-bank financial institutions listed in the DSE. Among them, data of 27 banks and 11 financial institutions are available from 2007 to 2016. Therefore the sample size is 270 annual reports for banks, 110 annual reports for non-bank financial institutions, and stock market data for year 2007-2016, where a balanced data panel was created for the time considered. This sample size is supported by Sidhu (2016), where the researcher used 147 financial reports and the stock market data covered the period from 2009 to 2012. In this case, the researchers did not consider other banks and non-bank financial institutions , which are also listed in DSE, due to unavailability of data and listing of the company after 2007. Only DSE was taken into consideration because most of the companies listed in CSE are also listed in DSE and DSE is the stock market largest and most well-known in the world than Bangladesh. On the other hand, other sectors are excluded because in terms of economic effect and growth prospect, banking and non-banking institutions have a huge effect on the overall economy, and the stock performance of these companies is more volatile with macroeconomic changes. Not only investors are inclined to invest more in these companies even if there is no proper regulation and rate.