Abstract

Stock markets have long played an important role in economic life Stijn V N Frans B Ludo C 2006 The objective of this study is to explore the presence of a causal relationship between stock market development and economic growth in Sri Lanka Sample period uses annual time series data over the period from 1990 to 2013 To address this relationship a Granger Causality Test was employed Nominal GDP values are used as a proxy for economic growth and market capitalization ratio MCR is used as a proxy for stock market development The results of this study support that the stock market performance plays a major role in economic growth in Sri Lanka