FOREIGN DIRECT INVESTMENT AS A DETERMINANT OF PERFORMANCE OF SHARE MARKET IN SRI LANKA

Ahamed Lebbe Abdul Rauf

FOREIGN DIRECT INVESTMENT AS A DETERMINANT OF PERFORMANCE OF SHARE MARKET IN SRI LANKA

Ahamed Lebbe Abdul Rauf

Abstract

The main concern of this study was to determine the impact of foreign direct investment to the performance of share market in Sri Lanka. Research anticipated observing the data net foreign direct investment and market capitalization. Study covered seventy two months from January 2009 to December 2014 as the sample period among the population because there were big fluctuation in Sri Lanka those variables and Sri Lankan economy and its capital market were reborn and successfully ended the three decade conflict in 2009. The share market calculated these values daily, by using those data were calculated the market capitalization. Share market performance is usually measures by market capitalization, share market size, liquidity, volatility, concentration and integration with world capital markets. With respect to the regression results, value for R square (0.613) indicates that net foreign direct investment presents 61 percent of total variation of dependent variable. In the context of empirical studies, net foreign direct investment can be considered as success predictor of the market capitalization. Further results reveal that the evidences that net foreign direct investment have a positive and significant impact on market capitalization and for accepting the hypothesis of the present study. Finally this study founds relationship between foreign direct investment and performance of share market in Sri Lanka. This study also suggest that infrastructure of the country plays a key role in attracting foreign direct investment into Sri Lanka. Further researchers can develop their studies through identify other macroeconomic variables

Keywords

Foreign Direct InvestmentMarket CapitalizationShare MarketLiquidity.

References

Akingunola, R.O, at el, (2012) Impact of Interest Rate on Capital Market Growth, Case of Nigeria, Universal Journal of Management and Social Sciences, 2(11), 1-24. Alajekwu, U. B and Achugbu, A. A (2012) The Role of Stock Market Development on Economic Growth in Nigeria: A Time Series Analysis. An International Multidisciplinary Journal. 6 (1) 24, 51-70. Alfaro, L. A, at el, (2004) FDI and economic growth: the role of local financial markets, Journal of International Economics, 3 (2), 113-134. Ali R, at el., (2012) The Role of Foreign Direct Investment (FDI) on stock market development: the case of Pakistan, Journal of Economics and Behavioral Studies, 4 (1), 26-33. Annual Report (2014) Cental Bank Annual Report. (2009-2014). Central Bank and Economic and Social Statistics of Sri Lanka, Annual Report. (2014) Colombo Stock Exchange and Capital Market Progress Report, Invest in Sri Lanka Be a Part of South Asia’s Strongest Growth Story. www.cse.lk. Anokye, M.A. and George, T. (2009) Foreign Direct Investment and Stock Market Development: Ghana's Evidence, International Research Journal of Finance and Economics, 26,178-185. Board of Investment of Sri Lanka (2013) Foreign Direct Investment in 2013 statistics and data support department, balance of payment division. Demiruc, K and Levine, R. (1996) Stock Market Development and Financial Intermediaries, World Bank Economic Review, 291-321. Deyshappriya, N.P.R, (2012) Can foreign direct investment influence Sri Lanka economic growth? An economic analysis. http://repository.kln.ac.lk/ handle/123456789/4528. Dharma, D. S, (2011) Foreign Direct Investment (FDI) in the context of trade and economic development, Sri Lankan Journal of Management, 16 (1 & 2 ), 1 – 40. Esther O. A, at el, (2010) The role of Foreign Direct Investment in economic development: a study of Nigeria, World Journal of Entrepreneurship, Management and Sustainable Development, 6 (1/2), 133 – 147. Hung T. N and Hang V. D. P, (2014) Relationship between Stock Market Development and Economic Growth: Evidences from Canada and Australia, International Journal of Economics and Finance, 6 (7), 1 – 10. Ihtisham, A. M and Shehla. A, (2013) Foreign Direct Investment (FDI) and stock market development in Pakistan, Journal of International Trade Law and Policy, 12 (3), 226 – 242. Jayasekara.S.D. (2014) Determinants of foreign direct investment in Sri Lanka. J.Univ.Ruhuna , 2, 4-13. Manpreet K. at el., (2013) A bivariate causality link between Foreign Direct Investment (FDI) and economic growth, Journal of International Trade Law and Policy, 12(1), 68 – 79. Marie, F. at el., (2012) Economic growth , Foreign Direct Investment(FDI) and corruption in developed and developing countries, Journal of Economic Studies, 39 (6), 639 – 652. Matthew, M.C.A and Maria, L. A, (2013) Business regulation, inward Foreign Direct Investment (FDI) and economic growth in the new European union member states, Critical Perspectives on International Business, 9 (3), 301-321. Mian S.N, at el., (2010) Relationship between economic growth and stock market development, African journal of business management, 4(16), 3473-3479. Mohammad I, at el., (2010), “Impact of foreign Direct Investment on Shares Market Value in Amman Exchange Market” American Journal of Economics and Business Administration, 2 (1): 35-38, Nalaka, G. (2013) Capital Market of Sri Lanka. Opportunities and Challenges. SEC, www.cse.lk Nihal S and Tharanga G.C.R, (2009) Compilation of foreign direct investment in Sri Lanka. Central bank of Sri Lanka, Wasantha P.P.A.A (2003) The Impact of Foreign Direct Investment for Economic Growth: A Case Study in Sri Lanka, 9th International Conference on Sri Lanka Studies, full paper number 092, 1-21. Xueli. W, (2010) A Literature Review on the Relationship between Foreign Direct Investment and Economic Growth. International Business Research, 3 (1), 52 – 56. www.cse.lk

FOREIGN DIRECT INVESTMENT AS A DETERMINANT OF PERFORMANCE OF SHARE MARKET IN SRI LANKA

Abstract

Keywords

References

More Articles from IIARD INTERNATIONAL JOURNAL OF ECONOMICS AND BUSINESS MANAGEMENT