Abstract—Economy of Bangladesh seems out of the wood with some favorable macroeconomic and microeconomic indicators such as, Moody’s rating of Ba3 (stable outlook) for last six consecutive years, Fitch ratings of BB-(stable outlook) for second time, stable foreign exchange rate, sufficient foreign exchange reserve, low cost external borrowing, surplus in balance of payment, low fuel price in international market, controlled inflation rate, less pressure in government subsidy, declining lending interest rate ( however not in a single digit yet), some recent mega projects implemented by Government of Bangladesh etc. But, Bangladesh is not being able to turn over a new leaf because of moving around 6 % GDP growth rate over the last decade resulting from sluggish private sector investment growth in the economy of Bangladesh. There are some road blocks that can be responsible for sluggishness of investment growth in Bangladesh such as high lending interest rate compared to other Asian countries, political unrest, inadequate power (electricity, oil, gas etc.) generation and supply, infrastructure problem, scarce land availability, corruption in public and private organizations, illegal transfer of investable funds abroad, lack of confidence on government policies, high interest rate of government financial instruments (National Savings Deposit) as safe source of alternative investment etc. In this context, we have identified to what extent above mentioned factors are responsible for investment sluggishness in Bangladesh. Besides, we have observed how the tools of monetary policy can be used effectively to accelerate investment for economic growth in Bangladesh. This paper also investigates the impact of monetary policy to drive investment growth in Bangladesh based on
the credit disbursement by financial institutions to the three major sectors of GDP that includes agriculture, industry and service sector against GDP of those particular sectors. We have developed regression model to estimate the required level of loan disbursement from financial institutions to achieve targeted level of GDP growth rate of fiscal year 2015-16. All the primary and secondary data have been analyzed using SPSS software. At the end of the paper, we have recommended some measures to improve in each and every impediments of investment and tools of monetary policy for ensuring investment growth and achieving targeted economic growth in Bangladesh.
