Abstract:
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 affect to 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 were 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 lengthens the literature, providing
valued information to economists in developing countries and to the academia.
