This study is an attempt to model the linkages between stock market development and economic growth in developed and emerging markets. The causality direction between stock market development and economic growth has also been examined in order to provide solid policy implications. Mainly, the relationship and direction of causality between stock market development and economic growth were tested using dynamic panel data analysis based on the Generalised Methods of Moment (GMM) and panel Granger non-causality, respectively. Additionally, panel unit root tests were also applied to check the stationary of the selected variables to avoid misleading results. The study focuses on 20 countries, both developed and emerging markets, and data were collected over the period 1990–2014 mainly from World Bank data series. Dynamic panel data analysis confirms that there is a statistically significant relationship between stock market development and economic growth in both developed and emerging markets. Further, the study emphasises that only the finance-led growth hypothesis is valid for emerging markets while developed markets support bidirectional causality between stock market development and economic growth, reflecting the existence of both the finance-led growth hypothesis and the growth-led finance hypothesis. Hence, it is crucial to formulate appropriate policies to shift unproductively allocated funds towards stock markets to meet long-term capital requirements to encourage higher economic growth. JEL Classification: C230, C220, G100, E010

The article examines recent trends in the economic relations between Sri Lanka and China focussing on trade, investment and tourism dimensions. Although bilateral economic ties between Sri Lanka and China have strengthened over time, the article demonstrates Sri Lanka’s low rank among China’s economic partners. For example, while China is the second-largest tourism partner of Sri Lanka in terms of tourist arrivals, Sri Lanka does not rank among even China’s top 25 tourist destinations. Consequently, the article recommends certain policy priorities to ensure mutually beneficial economic relations. With regards to tourism, it recommends promoting Sri Lanka’s brand on Chinese e-tourism websites and social media, introducing user-friendly tourist apps in Chinese, strengthening air connectivity and celebrating Chinese festivals. Similarly, trade and investment could be facilitated by stronger links with Chinese cities and connecting Sri Lankan students in China to the Chinese industry via internships and building commercial networks from the ground up.

The current study examines the Stock Market Anomalies in Colombo Stock Exchange (CSE); Sri Lanka during the period of 2004 to 2013. The existences of both Day of the Week Effect and Monthly Effect have been tested using daily and monthly data respectively. The Ordinary Least Squares (OLS) method and GARCH (1, 1) model were employed to capture the Day of the Week effects and Monthly Effects along with the daily volatility behavior. The sample period was divided in to two periods as War Period and Post War Period in order to take the impacts of the War in to account. The results indicate the presence of negative Monday effect and the positive effects for all other days only for the war period. Further, the positive volatility effect on Monday and the negative volatility effect on Friday have been examined for both war period and the entire sample period with significant Wald F statistics. Despite, the positive January effects are common for all sample periods, the negative December effects cannot be identified for post war period. Hence, the study confirms the existence of Stock Market anomalies; both day of the week effect and monthly effect particularly during the war period. Moreover, these seasonality patterns limit the validity of Efficient Market Hypothesis in the context of Colombo Stock Exchange.Keywords: day of the week effect, monthly effect, efficient market hypothesis, volatility effect, stock market anomalies

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