Browsing by Author "Farvin, M.N.N."

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    The Impact of Stock Market Performance on Economic Growth of Sri Lanka: An Econometric Analysis
    (Uva Wellassa University of Sri Lanka, 2015) Farvin, M.N.N.
    Capital markets long played an important role in economic history. Recently the focus has shifted towards the stock market performance and economic growth. The purpose of this study is to explore the presence of the causal relationship between these two variables. The study employed twenty-eight years of time series data from 1990 to 2018. Sample data collected from Colombo stock exchange, World bank data and central bank annual reports. Market capitalization is the stock market proxy and macroeconomic variables are control variables where GDP become proxy for economic growth. Data set is proven to be stationary at the 1st difference of the ADF test. Johanson co-integration test, vector error correction model and impulse response test used to check the short run dynamics as well as the long run relationship between the stock market and economic growth. The co-integration test results confirm that there exists a long-run relationship between stock market performance and economic growth. The Impulse Response Function suggests that shocks from the stock market do not make an immediate effect on the economic growth but in the long run there exist a positive relationship. Other macroeconomic variables show fluctuated negative impacts on economic growth while FDI manages to create a positive relationship in the long run. Hence the study revealed a positive impact regarding the stock market performance and economic growth, policymakers concern should increase towards the stock market in order to boost the economic growth. Keywords: Stock market performance, Market capitalization, Economic Growth, long run relationship, macroeconomic variables.
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    Impact of Stock Market Performance on Economic Growth of Sri Lanka: An Econometric Analysis
    (Uva Wellassa University of Sri Lanka, 2020) Farvin, M.N.N.; Gunarathne, Y.M.C.; Yapa, U.A.S.
    Capital markets long played an important role in economic development. Recently, attention was grabbed by the stock market performance and economic growth. The objective of this study was to explore the causal relationship between stock market performance and economic growth. The study used time-series data throughout 1990 - 2018. Data were collected from the Colombo Stock Exchange, World Bank data, and Central Bank annual reports. Market capitalization was used as the proxy for stock market performance and Gross Domestic Production (GDP) was used as the proxy for economic growth. The macroeconomic variables such as export, Foreign Direct Investment (FDI), inflation, and capital formation were used as the control variables in this study. According to the Augmented Dickey Fullar (ADF) test, the data set was stationary at the first difference form. Johanson co-integration test, Vector Error Correction Model, and Impulse Response Functions were used to check the short-run dynamics and long-run relationship between the stock market performance and economic growth. The cointegration test results confirmed that there is a long-run relationship between stock market performance and economic growth. The Impulse Response Function suggested that shocks from the stock market did not make an immediate effect on economic growth but in the long run there existed a positive relationship. Other macroeconomic variables showed fluctuated negative impacts on economic growth while Foreign Direct Investment managed to create a positive relationship in the long run. Therefore, the study recommends the policymakers to increase the concern towards the stock market performance to boost economic growth. Keywords: Economic growth, long-run relationship, Macroeconomic variables, Market capitalization, Stock market performance