How does Financial Liberalisation Impact on Money Demand and Economic Growth? Evidence from Sri Lanka Ramesh Chandra Paudel Nelson Perera Sydney Business School University of Wollongong Northfields Avenue Wollongong NSW 2500 Australia ABSTRACT This study examines the role of financial liberalisation on money demand and economic growth employing ARDL(Autoregressive distributed Lag) approach of cointegration in Sri Lankan data for the duration of 1963 to 2006. We did not find such a significant positive contribution of financial liberalization in money demand and economic growth of Sri Lanka as explained by the supporters of the financial liberalization. The results show that the financial liberalization has a significant negative impact on narrow and broad money demand in the long-run, while such impact is found to be positive in the short-run but not significant; and significant positive impact in the short-run on broad money. In the case of economic growth financial liberalization has played the positive role but not significant, while in the short-run the relation is found to be negative. JEL Classification: O53, O40, F36, E41 Key Words: Sri Lanka, Economic Growth, Financial Liberalisation, Demand for Money .