Do the Quality of Institutions, War and Macroeconomic Factors Matter for Stock Market Development? The Evidence from Sri Lanka | Zendy

N.P. Ravindra Deyshappriya | Zendy

Open Access

Do the Quality of Institutions, War and Macroeconomic Factors Matter for Stock Market Development? The Evidence from Sri Lanka

Author(s) -

N.P. Ravindra Deyshappriya

Publication year - 2014

Publication title -

journal of economics and development studies

Language(s) - English

Resource type - Journals

eISSN - 2334-2382

pISSN - 2334-2390

DOI - 10.15640/jeds.v2n4a4

Subject(s) - stock market , economics , sri lanka , exchange rate , monetary economics , per capita , stock (firearms) , inflation (cosmology) , stock exchange , interest rate , macroeconomics , finance , geography , population , context (archaeology) , demography , archaeology , socioeconomics , sociology , tanzania , physics , theoretical physics

This paper models the impacts of the quality of the institutions, war and macroeconomic factors on stock market development of Sri Lanka over the period of 1990 – 2012 using the co-integration analysis and error correction model. According to the both long run and short run models, war and institutional quality are the most influential negative and positive factors of stock market development respectively. In addition, macroeconomic factors such as capital formation, floating exchange rate regime, inflation, real interest rate, per capita GDP andforeign direct investment also ensure the stock market development in Sri Lanka. Therefore, the current study highly recommended to accommo date the appropriate policies to ensure the quality of the institutions and peaceful environment along with macroeconomic stability.

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