Trade in financial services in developing countries: a case of the Bangladesh financial sector

PurposeThe purpose of this paper is to investigate the opportunities and challenging prospects for liberalizing financial services in various ways under the General Agreement on Trade in Services (GATS), in view of Bangladesh's interests and concerns.Design/methodology/approachDifferent tabular and graphical approaches and critical investigation are conducted to analyze the impact of financial liberalization to explore challenges and opportunities of liberalizing financial sector under GATS framework.FindingsThis paper finds that although Bangladesh does not make any commitment under GATS, the rate of liberalization in the financial sector has been quite rapid. As one of the least developed countries (LDCs), Bangladesh should have the flexibility to make commitments as well. From the present status of financial sector liberalization, this paper recommends that Bangladesh should adopt commitments because any non‐commitment sends the wrong signal to the global market and may reduce foreign direct investment.Practical implicationsThe recommendation of this paper is very practical for trade policy for liberalizing financial sector in Bangladesh as well as other developing countries which already made great liberalization of this sector but did not make any commitments under GATS.Originality/valueThis paper is the first attempt to analyze the financial sector liberalization under GATS framework in the LDCs particularly in Bangladesh financial sector.