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.
The Effect of Green Banking Practices on Banks’ Financial Performance: Evidence from Licensed Banks of Sri Lanka
(Department of Finance, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka., 2025) Perera, M. P. N.; Fernando, J. M. R.
Introduction: This study explores the impact of green banking practices on the financial performance of licensed banks in Sri Lanka, focusing on three key dimensions: green costs, country regulations, and corporate social responsibility (CSR) initiatives. The objectives are to examine how green costs affect financial performance, assess the moderating effect of country regulations on this relationship, and analyze the role of corporate social responsibility spending in enhancing financial performance. The research aims to provide actionable insights for the banking industry and policymakers to implement financial strategies with sustainability goals by addressing these objectives. Methodology: The study adopts a quantitative methodology, utilizing secondary data from the annual reports of ten licensed local banks with the highest market capitalization in Sri Lanka from 2018 to 2023 and also Worldwide Governance Indicators. The data sample of the study is the ten Licensed Domestic Banks with the highest total market capital in Sri Lankan banking industry. Descriptive statistics and regression analysis were used to assess the relationships between variables, and structural equation modeling was used to ensure the robustness of the results. Findings: The findings show a positive significant relationship between green costs and financial performance, with sustainable investments enhancing profitability through operational efficiency. CSR activities also show a strong positive impact, reinforcing the value of corporate accountability in driving financial growth. On the other hand, strict country regulations were found to have a negative impact on financial performance, highlighting the challenges of balancing environmental compliance with operational flexibility. Conclusion: The study concludes that green banking practices, especially when combined with strategic CSR initiatives, offer significant financial and reputational benefits. Policymakers are encouraged to design balanced regulatory frameworks that promote environmental objectives while minimizing compliance costs for banks. These findings highlight the strategic importance of sustainability in achieving long-term financial and environmental goals.
The Impact of Financial Distress on Firm Performance: Evidence from Listed Companies in Sri Lanka
(Department of Finance, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka., 2025) Madhushika, A. M. S. L.; Fernando, J. M. R.
Introduction: Financial distress indicates the firm's risk of bankruptcy or financial instability. This study aims to identify the effect of financial distress on firms' performances during the economic crisis (2019–2023) and before the crisis (2015–2023) and analyze consumer services, capital goods, and food, beverage & tobacco sectors, which have the highest market capitalization. Methodology: This study collected data from 113 firms listed on the Colombo Stock Exchange under three sectors for a sample period of nine years, from 2015 to 2023. Using a quantitative approach, this study collected secondary data from the annual reports of the selected companies. The Altman Z-score was used as the explanatory variable to reflect the financial distress of the companies selected. Return on assets was used to measure the firm performance of the selected companies. Further, firm size and inflation rate were used as the control variables, and corporate governance was used as a moderate variable. Panel regression models were used in this study to analyze the data in STATA and SPSS software to test some hypotheses. Findings: The results of the study revealed that there were significant differences in financial distress before and during the crisis, with the compounded effects of financial distress and crisis periods further declining the firm's performance. Also, there are significant differences in financial distress levels between the three sectors, and corporate governance acts as a critical moderating factor, and its effectiveness varies across sectors. Conclusion: The findings of the study have practical implications for the strategic leaders of the three sectors. The study underscores the importance of early distress detection and adaptive governance practices to enhance firm performance, especially improving firm performance during economic crises.
The Impact of Green Banking Practices on Bank Financial Performance, Study Based on Commercial Banks of Sri Lanka
(Department of Finance, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka., 2025) Amarasiri, G. D. M. N.; Fernando, J. M. R.
Introduction: This study focused on the Impact of Green Banking Practices on Bank Financial Performance Study Based on Commercial Banks of Sri Lanka. Local or foreign researchers have not done any research considering the recent effect of green banking practices by evaluating the quantitative data on financial performance. Methodology: To address the three objectives; impact of green costs on the bank’s financial performance, the impact of corporate governance and its moderate relationship between green banking practices and banks’ financial performances, the effect of country regulation, and moderate the relationship between green banking practices and the financial performance of 10 licensed commercial banks in Sri Lanka under registration in the Colombo Stock Exchange, this study uses six variables including one dependent variable, one independent variable, two moderate variables, and two control variables. The study used secondary data from banks' annual reports and worldwide Governance Indicators from 2015 to 2023 and used panel regression to analyze the data. Findings: The study found green costs are negatively significant with ROA, demonstrating that short-term costs related to green initiatives could have a negative impact on short-term financial performance. While country regulatory, and corporate governance showed a significant positive relationship with ROA. Conclusion: This research suggests that bank financial performance is significantly impacted by green cost, green governance, and green country. Strong corporate governance procedures are crucial for promoting sustainable growth.
The Impact of Sustainable Finance Literacy and Perceived Environmental Values on Sustainable Investment Attitudes: Evidence from Individual’s Western Province in Sri Lanka
(Department of Finance, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka., 2025) Ekanayke, E. M. T. S.; Fernando, J. M. R.
Introduction: Today, the sustainability concept has become a more trending concept than in the past, and with the rapid development around the world, various kinds of environmental issues occur. To mitigate them, the sustainability concept needs to be followed. This study aims to empirically test the impact of sustainable finance literacy and perceived environmental values on sustainable investment attitudes. Methodology: This study collected data from individuals who reside in the Western Province of Sri Lanka during the period of October 2024 – November 2024. Using a quantitative approach, this study collected primary data from individuals through a questionnaire, including questions related to sustainable finance literacy, perceived environmental values, and sustainable investment attitudes. Gender, age, education level, and income level are used as moderate variables. Findings: The results of the study revealed that there is a significant impact between sustainable finance literacy and sustainable investment attitudes, as well as between perceived environmental values and sustainable investment attitudes. Demographic factors such as age, gender, education level, and income level also have a significant impact on sustainable investment attitudes. Conclusion: The findings of the study imply that, to stimulate sustainable investments in developing countries, regulatory authorities and sustainable fund issuers such as financial corporations can enhance promotional campaigns and workshops aimed at increasing awareness and understanding of sustainable finance literacy.