Commerce and Management

Permanent URI for this communityhttp://repository.kln.ac.lk/handle/123456789/140

Browse

Subject: search.filters.subject.Stock Market Performance

Search Results

Now showing 1 - 3 of 3
  • Thumbnail Image
    Item
    The Impact of Monetary Policy on Stock Market Performance: Evidence from Sri Lanka
    (Department of Finance, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka., 2025) Nimesha, A. T.; Piyananda, S. D. P.
    Introduction: The study explores the pivotal role of monetary policy in shaping stock market performance, focusing on Sri Lanka's All Share Price Index (ASPI). It highlights the critical influence of monetary tools like Treasury Bill Rate (TBR), Money Supply (M2), Standing Lending Facility Rate (SLFR), and Statutory Reserve Ratio (SRR) alongside macroeconomic variables like the Exchange Rate and Inflation Rate. By addressing the gaps in existing literature, particularly during the post-COVID-19 economic crisis, the research emphasizes the dynamic interplay between monetary policy and market performance. Methodology: This will be a quantitative test based on secondary data from July 2014 to August 2024, which was extracted from the Colombo Stock Exchange and Central Bank of Sri Lanka. Analyzing the research will draw upon econometric methods which include tests of unit roots, regression analysis, and diagnostic checks for multicollinearity, heteroskedasticity, and autocorrelation in order to draw conclusions about how monetary policy variables affect the ASPI. The model has been developed considering its robustness and reliability by incorporating all the required macroeconomic indicators as control variables. Findings: The above analysis indicates that monetary policy variables such as money supply, treasury bill rate, and inflation rate are positively and significantly related to ASPI. Thereby, these variables prove to be the important contributors toward improving stock market performance in Sri Lanka. On the contrary, SLFR and ER negatively influence ASPI, reflecting the devastating effects of the tight monetary stance and currency depreciation on market dynamics. The contribution of the SRR, though positive, is insignificant to explain the trend in the stock market. All diagnostic tests prove that the estimated model is reliable and free from multicollinearity, heteroskedasticity, or autocorrelation. The findings emphasize that monetary policy does not have a one-way effect on the stock market in Sri Lanka. Conclusion: Monetary policy significantly influences the performance of the stock market in Sri Lanka; therefore, proper monetary interventions are very important in creating a stable and prosperous market. Though the findings support theoretical expectations and prior literature on the subject, there are limitations to this present study, which include exclusion of some of the key macroeconomic variables, such as fiscal policy, and also sector-specific analysis. Thus, future study could elaborate more on those dimensions and create more comprehensive insights. These are very important findings in terms of the policy implications for policymakers and investors in developing an appropriate view of how monetary policy affects stock performance in emerging economies.
  • Thumbnail Image
    Item
    Relationship between Stock Market Performance & Economic Growth: Empirical Evidence from Sri Lanka
    (Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2016) Silva, N.K.L.; Perera, P.R.M.R.; Silva, N.L.C.
    In general, economic growth is an important factor which helps a country to become strong and prosper than the other nations in the world. Thus the attempt of this study is to identify the relationship between stock market performance and economic growth of Sri Lanka and to analyze how stock market performance affects the economic growth of Sri Lanka. Quarterly data is collected from Central Bank of Sri Lanka, Department of Census and Statistics of Sri Lanka, and Colombo Stock Exchange for a period of sixteen years from year 2000 to 2015 to follow the analysis where All Share Price Index representing the Stock Market Performance is the independent variable while Real Gross Domestic Product representing the Economic Growth is the dependent variable. Data set is proven to be normally distributed. Econometric technique of simple regression model and correlation analysis was used to analyze the data using SPSS software in order to identify and further explain the relationship between stock market performance and economic growth of Sri Lanka. Findings of the study is parallel with the previous literature that discloses a strong positive relationship between stock market performance and economic growth of Sri Lanka. This study extends the literature, providing valued information to economists in developing countries and to the academia.
  • Thumbnail Image
    Item
    The Effect of Foreign Exchange Market Returns on Stock Market Performance in Sri Lanka
    (Faculty of Commerce and Management Studies, University of Kelaniya, 2015) Perera, M.
    Exchange rate is one of the most influencing macroeconomic variables on stock returns in most of the countries. Thus, main objective of this study is to identify the effect of foreign exchange market returns on stock market performance in Sri Lanka. In order to evidence the study, researcher used publicly available secondary data from Colombo Stock Exchange and Central Bank of Sri Lanka. According to Guneratne (2011), exchange rate has a strong explanatory power in determining the stock market returns of the country. All share price index percentage changes are observed as dependent variable and the respective percentage changes of USD/LKR, EUR/LKR and GBP/LKR exchange rates as independent variables of this research. Exchange rate data for the period of 2002 to 2014 are considered for the research. A linear multiple regression model is developed to find the relationship between selected variables and following Noel & John (2009), correlation between variables are tested. Results of the research discloses that USD/LKR and GBP/LKR exchange rate returns have a strong explanatory power to All share price index (ASPI) returns. At the same time USD/LKR returns exhibits a negative correlation while other two exchange rates have a positive but weak correlation to ASPI returns. Findings of this research provide valuable information to investors in equity markets, to forecast potential stock returns with reference to exchange market fluctuations.