Browsing by Author "Fernando, J. M. R."

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Corporate Governance and Earnings Quality: Evidence from Listed Companies in CSE
(Department of Finance Faculty of Commerce and Management Studies University of Kelaniya, 2020) Rajapaksha, D. C.; Fernando, J. M. R.
Today, organizations tend to increase good governance with the objective of improving firms’ performances, and its value together with earnings quality. Corporate governance and earnings quality are contemporary business issues and a debatable research area in the field of finance. Thus the main aim of this study is to investigate the effect of corporate governance on the earnings quality of listed companies in Colombo Stock Exchange. This study employed Hirbar and Collin’s Ratio, Dechow and Dichev’s Ratio and Penman’s Approaches to measure the earnings quality while Board Size, Board Independence, CEO Duality, External Audit, Audit Committee Independence, Audit Committee Quality and Gender Diversity have been used as the indicators of the corporate governance characteristics of listed companies. The research used secondary data based on the annual reports of the selected listed companies in the Colombo Stock Exchange over the period of 2015-2019 for the analysis.Panel regression with random effect model used to analyse the data. The findings revealed that Board Independence, Audit Committee Independence and Gender Diversity are significant with firm’s earning quality whereas Board Size, CEO Duality and Audit Committee Quality are insignificant in explaining the earnings quality of the companies.The study found that in general the corporate governance effect on the earnings quality of listed companies in CSE. Thus, the companies should be given due attention on improving the quality of the governance practices in order to enhance the quality of company earnings and to reduce any managerial opportunistic behaviour.
Factors Influencing on Customer Adaption Towards Internet Banking of Commercial Banks in Sri Lanka
(Department of Finance Faculty of Commerce and Management Studies University of Kelaniya, 2020) Perera, R. W. G. T.; Fernando, J. M. R.
Introduction - With the rapid technological advancement, it can be seen that internet banking plays a major role in banking field. Internet banking is a delivery channel that was introduced to customers to perform their transactions electronically via bank’s web sites. As a result of interpreting the experience, customer adaption is formed. Exploring the factors influencing on customer adaption towards internet banking in Sri Lanka is the objective of this study. Design/Methodology/Approach - A structured questionnaire was used for collecting primary data from internet banking users. Researcher selected 200 customers’ responses of different commercial banks in Sri Lanka using purposive sampling method. Factor Analysis, Cronbach's alpha, Descriptive Statistics and Multiple Linear Regression were used as data analysis techniques. Findings - The study conclude that perceived usefulness, perceived ease of use, perceived security, and social influence have significant positive effect on customer adaption towards the internet banking. However, perceived ease of use variable has higher significant effect on customer adaption towards internet banking. Conclusion – The study emphasized the importance of developing internet banking activities by banks. Increasing the knowledge of customers, by conducting programs about the benefits they can obtain from internet banking services and providing more facilities regarding the internet banking could be recognized as improvement plans that could be used by banks. Results of this study will be instrumental for banks to design marketing and promotional strategies in order to develop their Internet Banking portfolio.
Impact of Loan Growth and Business Model on Bank Risk Taking: Evidence from Sri Lanka
(Department of Finance Faculty of Commerce and Management Studies University of Kelaniya, 2020) Tharangani, K. G. I.; Fernando, J. M. R.
Introduction- Electronic banking has initiated from electronic revolution in global banking sector. Due to the flexible nature of the electronic banking system's banks could be able to offer entirely innovative banking products and services to satisfy customer needs. Thus, the main aim of this study is to investigate the impact of loan growth and business model on bank risk taking in Sri Lanka. Design/methodology- This study employed Abnormal Loan Growth rate to measure the Loan growth, Non-Interest Income to total income and Loan to deposit ratio as the proxies for business model. The research has used secondary data for the purpose of analysis. The annual reports of selected banks listed in Colombo Stock Exchange were used to collect the data over period of 2011-2019. Findings- Random effect model was used to analyse the data. The findings revealed that Abnormal Loan growth ratio, Loan to deposit ratio have significant positive impact with the bank risk where as Non-interest income to total income ratio have insignificant impact with Bank risk. Conclusion- This study suggests that there is an impact of loan growth and business model on bank risk taking in Sri Lanka. Thus, managers should carefully monitor loan growth on the individual level, since high rates of loan growth are associated with of bank risk-taking.
Macroeconomic Stress Testing and The Resilience Assessment of the Banking Sector in Sri Lanka
(Department of Finance Faculty of Commerce and Management Studies University of Kelaniya, 2020) Ekanayake, E. M. D. N. B. E. M. D. N. B.; Fernando, J. M. R.
Introduction - Financial stability and Macroeconomic stress testing of the banking system turned out to be an increasingly important objective in economic policymaking in the global context as well as in Sri Lanka. Although macroeconomic stress testing at the level of individual banks has been widely applied, macroeconomic stress testing at the level of entire financial systems is a more recent instrument. The study conducts a stress test to assess the banking sector vulnerabilities in Sri Lanka to the most extreme but plausible macroeconomic shocks. Methodology - The model attempt to account for the dynamics between banks' asset quality and key macroeconomic variables through conditioning the stress test based on the historical correlation between the variables and allowing for feedback effects from credit risk to the macro economy. Further, it uses historical and hypothetical stress scenarios to capture the most extreme but plausible key macroeconomic impulses on financial soundness indicators to evaluate the banking sector vulnerabilities. Findings - Results indicate a cointegration relationship between credit quality and key macroeconomic variables. The expansionary monetary policy positively and significantly affects credit quality and capital adequacy through economic growth. Conclusion – Study concludes that the Sri Lankan banking sector is not substantially vulnerable to and hence not threatened by various significant adverse shocks considered in the analysis domestically and externally via stressed GDP growth rate as per current BASEL norms. Even if the most extreme economic stress conditions witnessed over the past two decades were repeated, the Sri Lankan banking sector should remain robust in terms of tier 1 and tier 2 capital requirements.
The Nexus Between Economic Growth, Foreign Direct Investment and Environmental Pollution in Sri Lanka
(Department of Finance Faculty of Commerce and Management Studies University of Kelaniya, 2020) Dananjaya, A. D. T.; Fernando, J. M. R.
Globalization, liberalization and the exchange of capital flows are the most significant features in modern economics that have played a vital role in almost every economy. In the recent past, the world heavily moves onto several manufacturing industries with highly pollution intensive. Thus, the aim of the study is to examine the nexus between economic growth, foreign direct investments and environment pollution in Sri Lanka. Therefore, the study focuses on the bidirectional and multidirectional nexus between these three variables over a long-time horizon. The sample is based on Sri Lanka covering the period from year 1978 to 2019. Data was collected through secondary data sources, such as United Nations Conference on Trade and Development and the world development indicators. The data was tested using time series ARDL regression model. Foreign Direct Investments and Gross Domestic Production has a significant impact towards each other’s, while, Gross Domestic Production and Carbon Dioxide and Foreign Direct Investment does not have a significant impact. Form the Bound test it was proven that Gross Domestic Production and Carbon Dioxide does not have a long term relationship indicating that there is no cointegration. The study revealed that in order to promote economic development, energy consumption should be carried out in a more thoughtful way. Environmental management is very important as a result of sustainable progress. The Sri Lankan authorities should take the requisite measures to resolve environmental problems and safeguard the environment, as environmental conservation does not in the long run, conflict with economic growth.
The Economic Policy Uncertainty Impact on Firms’ Capital Structure Evidence from Consumer Services Sector in Sri Lanka
(Department of Finance, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka., 2025) Harshani, M. M. E.; Fernando, J. M. R.
Introduction: This study investigates the impact of Economic Policy Uncertainty (EPU) on the capital structure decisions of consumer services firms listed on the Colombo Stock Exchange in Sri Lanka. Specifically, it examines (1) the relationship between EPU and market leverage (ML), and (2) the effect of EPU on book leverage (BL). Methodology: Utilizing a quantitative research approach, the analysis is based on panel data from 2014 to 2023. The study covers 10 consumer service companies in Sri Lanka over a ten-year period. EPU data was collected from the EPU index scores provided by the World Bank, while other variables were gathered from audited annual reports and DataStream. Findings: The findings reveal a significant negative relationship between EPU and both ML and BL, suggesting that heightened economic uncertainty prompts firms to adopt more conservative financial strategies. Among the control variables, firm size shows a positive correlation with leverage, indicating that larger firms are better positioned to access debt markets. Profitability, on the other hand, has a negative relationship with leverage, as more profitable firms tend to rely on internal financing. Other variables, including tangibility, EBIT, GDP, and board size, exhibit limited or no significant influence on leverage decisions in the context of high EPU. Conclusion: These findings underscore the critical role of EPU in shaping corporate financial strategies and highlight the continued relevance of firm-specific factors. When economic policy uncertainty rises, companies tend to reduce borrowing, resulting in lower market and book leverage. Policymakers should aim to create a stable economic environment and enforce transparent risk disclosure practices to enhance market resilience. Meanwhile, firms should implement robust financial strategies to navigate uncertainty effectively, and investors may prefer companies with lower debt exposure during volatile periods.