Stock Market Measures and Market Performance

Authors

  • B. J. Liyanapathirana Department of Mathematics, Faculty of Applied Sciences, University of Sri Jayewardenepura, Sri Lanka
  • R.P.K. C.M. Ranasinghe Department of Mathematics, Faculty of Applied Sciences, University of Sri Jayewardenepura, Sri Lanka

DOI:

https://doi.org/10.30564/jesr.v3i2.1672

Abstract

Sri Lanka is considered a highly fluctuating economy in the South Asian region. It is vital to understand the behavior of economy in order to obtain the maximum benefit. Stock market can be considered as one of the key influencers to the economy whereas the behavior of the stock market would highly define the behaviors of the overall economic system. It is required to identify the stock market measures and their contribution for the market development in order to identify the influence of stock market.

The immense importance of its actions on the market performance leads to find more about the stock market’s measures. This research contains the evidence of the study conducted to identify the development of the stock market along with the behavior of the stock market measures such as all share price index, market capitalization, dividend yield, price to earnings ratio and shares traded equity.  All of these variables were used to obtain a model to describe and predict performance of stock market over the time.

This study is based on the secondary data obtained from the CSE (Colombo Stock Exchange). A trend analysis was conducted for each series of data and results were used for the analysis carried on from there. Unit root test was performed to ensure the stationarity of the data. Then, a time series regression model and Granger causality tests were used to identify the relationship between the measures of stock market. Major finding of the study depicts that all the measures of the stock market have influences on the stock market development except for the dividend yield. These findings are useful in the process of decision making in many aspects.

 

Keywords:

Sri Lanka; stock market measures; stock market performance

References

[1] Abeywardana, N.L.E. and Weerakoon Banda Y.K. (2015). Impact of Observable Determinants and Unobservable Effect on Capital Structure: Evidence from Quoted Public Manufacturing Companies in Sri Lanka, The International Journal Of Business &Management, 3(1), 150-158

[2] Atje, R and Jovanovic, B. (1993). Stock markets and development, European Economic Review, 37(2-3), 632‐640.

[3] Baker, H.K., Dewasiri, N.J., Weerakoon Banda, Y.K. and Azeez, A.A. (2019). Determinants of Dividend Policy: A Triangulation Approach. Managerial Finance, 45(1), 2-20.

[4] Bencivenga, V & Bruce, S (1991). Financial intermediation and endogenous growth, Review of Economic Studies, 58(2), 195-209.

[5] Creane, S, Goyal, A, Mushfiq, M, & Sab, R (2003). Financial development and growth in the Middle East and North Africa, IMF Working Paper, Washington, DC.

[6] Dewasiri, N. J. and Weerakoon Banda Y. K. (2014). Impact of Dividend Policy on Stock Price Volatility: Evidence from Sri Lanka, 11th International Conference on Business Management: ICBM, University of Sri Jayewardenepura, Sri Lanka.

[7] Dewasiri, N., & Weerakoon Banda, Y.K. (2015). Dividend Policy and Stock Price Volatility: An Error Corrected Approach. Asia-Pacific Journal of Management, 11(3), 165-171.

[8] Dewasiri, N. J., Weerakoon, Y. K. B., & Azeez, A. A. (2018). Mixed methods in finance research: The rationale and research designs. International Journal of Qualitative Methods, 17, pp. 1-13.

[9] Dewasiri, N.J., Weerakoon Banda, Y.K., Azeez, A.A., Jayarathne, P.G.S.A., Kuruppuarachchi, D., and Weerasinghe, V., (2019). Determinants of dividend policy: Evidence from an Emerging and Developing market. Managerial Finance, 45(3), pp.413-429

[10] King, R & Levine, R (1993). Finance and growth: Schumpeter might be right, Quarterly Journal of Economics, 108(3), 717‐737.

[11] Levine, R & Zervos, S. (1998). Stock markets, banks, and economic growth, American Economic Review, 88(3), 688‐726

[12] Seetanah, B., Subada, U., Sannassee, R. V., Lamport, M., & Ajageer, V. (2012). Stock market development and economic growth: Evidence from least developed countries. Working Paper No. 05/2012. Berlin Working Papers on Money, Finance, Trade and Development.

[13] Vazakidis, A & Adamopoulos, A. (2009). Stock market development and economic growth, American Journal of Applied Sciences, 6(11), 1932-1940.

Downloads

Issue

Article Type

Articles