Browsing by Author "Senavirathna, T.G.D.C."

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    Analyzing the Macroeconomic Determinants in Stock Market Development in Sri Lanka
    (Uva Wellassa University of Srilanka, 2011) Senavirathna, T.G.D.C.; Deshapriya, N.P.R.
    Note: See the PDF Version Businesses use diverse types of methods to meet their financial needs. They can mainly be divided into capital market and money market. Capital market provides them long term capital while money market provides short term financial requirements. Among them, stock market is the place where secondary shares are issued to fulfill the capital requirements in public companies and make opportunities for investors to obtain benefits from their investments. In Sri Lanka, these transactions occur in Colombo Stock Exchange. In generally, stock market development indicates a developing industrial sector and a growing economy of a country. According to the traditional theoretical arguments, stock market development depends on macro-economic factors in both developed and emerging stock markets. Especially after the civil war in Sri Lanka, stock market has been playing a major role in the Sri Lankan economy. As a result, Colombo Stock Exchange completed its best year in the history in 2009 overcoming the challenges experienced in 2007 and 2008. This performance of the Colombo Stock Exchange during the year 2009 made it the best performing stock market among the 52 markets beating Mongolia and Bangladesh markets (According to Bloomberg News). Within this scenario, this research was conducted to identify macro-economic determinants of growth of stock market as the primary objective while assessing the effect of Exchange rate policy on market capitalization and assessing the effect of war on market capitalization in stock market as secondary objectives. This paper is an effort to quantify the above problem descriptively and econometrically
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    Analyzing the Macroeconomic Determinants of stock market Development in Sri Lanka
    (Uva Wellassa University of Sri Lanka, 2010) Senavirathna, T.G.D.C.
    According to the traditional theoretical arguments stock market development depends on macroeconomic determinants in both developed and emerging stock markets.Especially after civil war in Sri Lanka, stock market has played a major role in the Sri Lanka economy.Therefore it is timely important to examine the stock market development causes by the macroeconomic determinants or any other reasons.This paper is an effort to quantify the above problem descriptively and econometrically.Especially Ordinary Least Squared (OLS) method has been employed to analyze the macroeconomic determinants of stock market development, further dummy variables were included to assess the effect of exchange rate policy on market capitalization and assess the effect of war on market capitalization during the period of 1990 -2009.Mainly I used secondary data absorbed from the annual reports of central bank of Sri Lanka and reports of Colombo Stock Exchange.The results show that there is a significant effect of unemployment rate, growth rate of gross domestic product, inflation rate, nominal interest rate and real interest rate on stock market development while national savings does not prove significant.Further the results show that there is a significant effect on exchange rate policy and war effect on stock market development in Sri Lanka. This study strongly recommends that a sound macroeconomic background in order to achieve a stock market objectives.