Abstract:
It is currently debated in academic and other forums that the peace dawning in the
country has induced the performance of CSE in Sri Lanka. It is invariably accepted
that the smooth functioning of the stock market is largely determined by the stability
of the country’s business environment. Thus, this paper attempts to explore whether
there is an improvement in the performance of the each business sector listed on
CSE in the post war periods. For the purpose of separately highlighting the impact
of peace on stock market performance some pre war periods are also considered. The
period 2005 to 2008 is considered as pre war period and the period 2009 to 2012 is
considered as post war period. To measure the performance of the CSE some important
indicators were used namely, sector indexes, market capitalization of the companies,
foreign purchases and sales and total turnover of the CSE and key market ratios.
Perhaps importantly, these indicators are very widely used in measuring stock market
performance by practitioners and academics in developed and developing markets. It
is established that majority of the performance indicators used in this study are highly
sensitive to the peaceful dividend in the country. Moreover, it is found that majority of
indicators have gained significant improvement after the war. The findings imply that
peace is an essential element for the development of the capital market in Sri Lanka.
