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Subject: search.filters.subject.Economic Growth

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    Stock Market Development and Economic Growth: Empirical Evidence from Sri Lanka
    (Department of Accountancy, University of Kelaniya, Sri Lanka., 2021) Kengatharan, L.; Vanajah, S.
    The financial markets have played a crucial role in the country's economic life for a long time. The objective of this study was to examine the empirical relationship between stock market development and economic growth in Sri Lanka. This study used annual time series data for the period from 1990 to 2018 which were collected from the annual reports of the Colombo Stock Exchange (CSE) and the Central Bank of Sri Lanka. The data were analyzed employing co-integration test, and vector error correction model (VECM). The results of VECM revealed that stock market capitalization, foreign direct investment, and inflation have a significant impact on economic growth, while turnover has not significantly influenced economic growth. The findings of the study have an important implication for the economic policymakers and government of Sri Lanka to enhance economic growth. Further, research can be extended by choosing more periods of data and choosing other indicators of stock market development indicated in previous studies.
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    Stock Market - Economic Growth Nexuses: Evidence from Asian Stock Markets
    (Department of Finance, University of Kelaniya., 2023) Wickramasinghe, N. T.; Deyshappriya, N. P. R.; Gunarathne, Y. M. C.
    Purpose: The main purpose of this study is to examine the relationship between stock market development and economic growth in Asian countries focusing on causality direction. Methodology: The study based top 10 stock exchanges in the Asian region and the secondary data mainly collected from World Development Indicators of the World Bank over the period of 1990-2020. Generalized Method of Moment (GMM) Dynamic Panel analysis along with panel unit root and cointegration tests were employed to accomplish the objectives of the study. Findings: The cointegration test emphasizes the existence of long-term relationship between stock market development and economic growth while the GMM dynamic panel analysis confirms the positive relationship between stock market development and economic growth of top 10 stock exchanges in the Asian Region. Moreover, reverse causality which runs from economic growth to stock market development has also been confirmed by the GMM dynamic panel analysis. Consequently, bi-directional causality between stock market development and economic growth exists in the top 10 Asian stock exchanges confirming both Finance-Led Growth Hypothesis and Growth-Led Finance Hypothesis. Hence, stock market and growth-oriented policies are recommended to be implemented to optimize the mutual benefits. Originality: One of the key significances of the study is that the study has constructed a composite index to measure stock market development rather than rely on conventional measures.
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    Determinants of Foreign Direct Investment and its impact on Economic Growth: Evidence from South Asian Association for Regional Corporation (SAARC) Countries
    (Faculty of Commerce and Management Studies, University of Kelaniya., 2019) Gunawardhana C. S.; Damayanthi N. M. M.
    It is argued that Foreign Direct Investment (FDI) inflows benefits the recipient countries by providing capital, technology and long term foreign exchange and bridges savings and investment gap of the recipient country. Further, FDI provides an important role in achieving economic growth in the developing countries. This paper identifies the influential factors that determine FDI inflow in the South Asian Association for Regional Cooperation (SAARC) Countries and empirically investigates the relationship between economic growth and FDI. Further, this study uses time series data from 1980 to 2018 and considered the size of the economy, economic growth, potential of the host market, economic stability, degree of openness, income level and institutional developments in the host country to identify influential factors to determinants of FDI. Analysis reveal that countries with larger Gross Domestic Product (GDP) growth rate can successfully attract FDI and FDI on the other hand, significantly affect economic growth of a country. In addition, it was found that current account balance, financial deepening and trade openness significantly play a crucial role in determining the FDI flows into recipient countries.