Browsing by Author "Gunasekara, A.L."

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Determinants of Financial Literacy: Analysis of the Influence of Financial Behavior and Financial Attitudes
(Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2022) Navodani, R.B.G.S.D.; Gunasekara, A.L.
Purpose: The purpose of this study is to identify the determinants of financial literacy and examine the most significant determinant of the financial literacy in Sri Lanka. This study focuses on how financial behavior and financial attitude impacts on the financial literacy in Sri Lanka. Design/Methodology/Approach: The research has used the quantitative approach to investigate this notion and gathered data from 400 individuals between only 18 and 60 years old in all nine provinces in Sri Lanka in order to achieve the research objectives. This research used a simple random sampling technique. In this study, the main source of data gathering approach is questionnaires. Findings: Based on the study's findings, the hypotheses test shows that the financial behavior and financial attitude are significantly impact to the financial literacy in Sri Lanka. As a result, the researchers suggest that the efforts needed to be made to include the importance of risk diversification, the time value of money, the calculation of compound interest, the importance of budgeting, effective savings strategies and money management skills debt in financial literacy programmes. Originality: This study considers the whole Sri Lanka to identify whether the financial behavior and financial attitude impacts financial literacy. This is a novelty of this study.
Determinants of Non- Performing Loans in the Banking Sector: Evidence from Sri Lanka
(Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2022) Kumara, G.S.P.; Gunasekara, A.L.
Purpose: In Sri Lankan context, Non-Performing Loans of banks have significantly increased during last few years due to the pandemic, and it has bad effect on bank performance. Nonperforming loans have a negative impact on banks' profits directly. Therefore, this study aims to identify determinants of non-performing loans and banking sector taking evidence from Sri Lanka. Design/Methodology/Approach: The sample of the study consists of 10 banks as included CSE main board in Sri Lanka. 10 years from 2012 to 2021 was used as the period for data collection. All the collected data were analyzed using STATA software, which included statistical tests such as multicollinearity, normality, and panel regression analysis. Finding: The findings show that return on equity ratio had a statistically significant negative relationship with the dependent variable (non-performing loans). while other variables (capital adequacy ratio, loan to deposits ratio, return on assets ratio, public debt as % of GDP, Annual average inflation rate, interest rate) are statistically insignificant. Also, the control variable firm size is statistically insignificant. Hence, banks should focus more on these dimensions while making a concerted effort to reduce non-performing loans. Originality: This study considers the pandemic period and it’s a novelty in this research.
Does Weather Contributes to Stock Price Variation? A Cointegration Analysis
(, International Conference on Business and Information (ICBI – 2019), [Accounting, Finance and Economics], Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2019) Gunasekara, A.L.; Jayasinghe, J.A.D.K.
The objectives of this study are to investigate whether there is a long term relationship between stock returns and weather factors and to examine whether the weather factors have an outperforming effect over macroeconomic variables when explaining the stock price variation. This study is motivated by the emergence of behavioral branch of asset pricing which pays attention towards the irrationality of investors who are influenced by the mood and the sentiment. This study investigates this phenomenon taking evidence from a growing market, Colombo Stock Exchange. The study use Johansen Cointegration Test with VAR - Vector Error Correction Estimates and Variance Decomposition. The results confirm that weather factors are related with the stock prices in the long run and reveal that temperature has an outperforming contribution to the stock price variation whiles supporting the Temperature Anomaly which is widely researched in this background.
The Dynamic Relationship of Domestic Credit and Stock Market Liquidity of the Commercial Banks on the Economic Growth of the Sri Lanka
(Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2022) Kumara, A.G.D.M.; Gunasekara, A.L.
Purpose: Domestic credit and Stock market liquidity are the most important components of the economy in any country. Both of these two components have been identified as highly impacted factors that affect economic growth in the studies. This study examines the dynamic and significant impact and the relationship between domestic credit and stock market liquidity on economic growth. Design/Methodology/Approach: The researchers use the quantitative research method and positivism philosophy. Researchers have collected secondary data from 2011 to 2021 on the selected research variables from Central Bank and other economic publications for the study. Also, domestic credit and stock market liquidity have been identified as independent variables and economic growth has been identified as dependent variables. Findings: The correlation analysis shows that the domestic credit has a weak negative and significant correlation to economic growth. Further, stock market liquidity has a weak, negative, and insignificant correlation to economic growth. Originality: This study covers the Covid-19 period and it is a novelty in this study.
Factors Affecting the Capital Structure of Sri Lankan Nonfinancial Sector Before and During the Covid-19 Pandemic
(Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2022) Gallage, K.S.S.; Gunasekara, A.L.
Purpose: This study attempts to find the factors affecting to capital structure before and during the COVID-19 pandemic taking empirical evidence from the Sri Lankan non-financial-sector companies listed in Colombo Stock Exchange. Design/Methodology/Approach: This study uses secondary data from 2019 to 2021. The data are gathered from the listed firm’s annual reports. The explanatory variables of this study are Size, Profitability, Tangibility, Growth, Risk, and the COVID-19 dummy variable. Further, Total Debt and Long term Debt are the dependent variables used for the analysis. Findings: The results reveal a significant negative impact from profitability to the total debt ratio before the pandemic period. However, it is positive and not significant during the pandemic period. Further, during the pandemic period, the size of the firm shows a positive significant impact on total debt ratio while growth of the firm shows a negative significant impact on the total debt ratio. In the case where the long-term debt ratio is considered as the dependent variable, tangibility has a positive significant impact before and during the pandemic. Originality: Studies linked to COVID-19 and its impact on capital structure is rare in relation to Sri Lanka. In this context, this study uncovers the association between firm specific factors and capital structure under the pandemic in Sri Lanka.
The Impact of Behavioral Biases on Stock Investment Decisions: Evidence from Kaluthara District in Sri Lanka
(Department of Finance, Faculty of Commerce and Management Studies University of Kelaniya Sri Lanka, 2024) Fernando, M.N.M.; Gunasekara, A.L.
Introduction: This research investigates the impact of behavioral biases on individual investors' decisions within the Colombo Stock Exchange, focusing on the Kalutara district in Sri Lanka. The study employs behavioral finance to uncover biases such as anchoring, overconfidence, disposition effect, and herd behavior, examining their collective influence on decision-making. The research addresses a gap by specifically exploring investor biases in the Kalutara district, considering the unique features of the Colombo Stock Exchange. Methodology: Guided by a positivist research philosophy and employing deductive research logic, the study utilizes a quantitative approach. The conceptual framework includes biases like the disposition effect, overconfidence, anchoring, and herding. The target population consists of individual investors actively participating in the Colombo Stock Exchange, with a representative sample of 103 investors selected through simple random sampling and carefully stratified based on demographic variables. Reliability testing indicates acceptable internal consistency (Cronbach's alpha = 0.634), while validity assessment suggests room for improvement (Cronbach's alpha = 0.490). With an 88% response rate, the demographic profile reveals a predominantly younger investor population, male dominance in stock investment, and a well-educated and diverse sample. Findings: The analysis of behavioral biases through a rating scale demonstrates a moderate level of explanatory power, with 23.4% of the variability in investment decisions explained by considered biases. The regression model highlights the significance of predictors, with disposition effect and anchoring exhibiting strong associations. Contrary to expectations, overconfidence bias has only a marginal effect, emphasizing the importance of exploring contextual variations. Anchoring bias emerges as the most influential factor, underscoring the need for preferential consideration when examining behavioral biases in the Colombo market. Conclusion: The study challenges existing literature by identifying anchoring bias as the sole significant factor in investment decisions, emphasizing the importance of tailoring analyses to specific market conditions and demographics for a comprehensive understanding of investor behavior in the Kalutara district.
Impact of Board Size, Gender Diversity, CEO Duality and Board Independence on Firm Value: Evidence from Diversified Finance Companies Listed in CSE
(Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2022) Fernando, H.N.J.; Gunasekara, A.L.
Purpose: This study aims to examine the impact of board diversity on firm value of listed diversified financial companies listed in the Colombo Stock Exchange (CSE) in Sri Lanka. Design/Methodology/Approach: To examine the research objectives diversified financial sector is taken as the population. In this regard, data is collected from diversified financial firms listed in main board of CSE. Board size, gender diversity, CEO duality and board independence are employed as independent variables in this study, while the firm value is the dependent variable. All the collected data were analyzed using STATA software, which included statistical tests such as multicollinearity, normality, and panel regression analysis. Findings: According to the study's findings, board size had a statistically significant positive relationship and gender diversity, and firm age had a statistically significant negative relationship with the dependent variable (firm value) while other three variables (Board independence, CEO duality and firm size) are statistically insignificant. Hence data set having heteroskedasticity and autocorrelation, cluster option was done to fix those errors. According to the regression results, board size is more effective in increasing value of diversified financial companies listed in CSE. Originality: The novelty of this study is that this research considers the whole the diversified financial companies listed in the Colombo Stock Exchange (CSE) and considers the Covid 19 period within the sample.
The Impact of Cognitive and Emotional Behavioral Biases on Stock Investment Decision Making in CSE Sri Lanka: Evidence from Colombo District
(Department of Finance, Faculty of Commerce and Management Studies University of Kelaniya Sri Lanka, 2024) Husni, N.M.; Gunasekara, A.L.
Introduction: This research investigates the influence of cognitive and emotional behavioral biases on stock investment decision-making within the Colombo Stock Exchange (CSE). It explores the effects of disposition effect, anchoring, overconfidence, and herding behavior on the investment decisions of individual investors in the Colombo district. The primary objective is to analyze the relationship between these biases and their impact on stock investment choices. Methodology: Primary data is gathered through a structured questionnaire that includes demographic factors, the dependent variable (investment decision), and independent variables (behavioral biases). The data is collected from a convenient sample size of individual investors in the Colombo district. Analysis of the results is conducted using the SPSS software. Findings: The collected data yields reliable and significantly valid results. The study employs descriptive analysis, Pearson's correlation analysis, and linear regression analyses. The findings suggest a noteworthy impact of anchoring bias and herding behavior on investment decisions, with a comparatively lesser impact observed for disposition effect and overconfidence bias among individual investors in the Colombo district. Conclusion: Based on these results, investors are advised to take into account the influence of anchoring and herding behavior for making effective investment decisions. This approach aims to optimize returns while minimizing risks when engaging in stock investment activities on the Colombo Stock Exchange.
The Impact of Cognitive and Emotional Behavioral Biases on Stock Investment Decision Making in CSE Sri Lanka: Evidence from Gampaha District
(Department of Finance, Faculty of Commerce and Management Studies University of Kelaniya Sri Lanka, 2024) Ratnavel, Akash; Gunasekara, A.L.
Introduction: Understanding the cognitive and emotional biases that influence investment decisions is crucial, especially in the context of the Colombo Stock Exchange (CSE), which plays a critical role in determining market trends and impacting Sri Lanka's overall economy. Methodology: This study employs a structured questionnaire. The behavioral biases consider in this study are Disposition Effect, Anchoring Bias, Overconfidence, and Herding Behavior and they are measured through a structured questionnaire with a 5-point Likert scale. The population comprises individual investors in Gampaha, with a sample size of 105 chosen through convenient sampling. Findings: The model suggests that herding behavior, disposition effect, and anchoring bias have a more pronounced influence as behavioral biases, while overconfidence has a relatively lesser impact on the investment decision-making of individual investors at the Colombo Stock Exchange. Conclusion: This study reveals a substantial impact of behavioral biases on investment decisions at the Colombo Stock Exchange.
Impact of Company Internal Factors on Debt Policy of the Listed Entities in Colombo Stock Exchange
(Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2022) Darshika, K.M.W.; Gunasekara, A.L.
Purpose: This study aims to examine the impact of institutional ownership, managerial ownership, free cash flow, asset structure and dividend policy on debt policy of listed firms by also considering the Covid 19 period. Design/Methodology/Approach: This study uses secondary data, that is, the financial reports of main board companies listed on the Colombo Stock Exchange 2019-2021. Purposive sampling using 92 data is being used in the research. Random effect regression analysis and conventional assumptions are the analysis methods employed in this study. Findings: The findings demonstrate that institutional ownership, free cash flow, and asset structure significantly improve debt policy, whereas managerial ownership and dividend policy have no impact. Originality: The sample period of this study covers the pandemic period. This is a novelty in this study.
Impact of Exchange Rate and Inflation on the Performance of Foreign Portfolio Inflows to Colombo Stock Exchange Sri Lanka: Pre and During Covid – 19 Periods
(Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2022) Dissanayake, D.A.S.D.; Gunasekara, A.L.
Purpose: The objective of this research is to investigate whether the exchange rate, Inflation rate fluctuations, and covid-19 impact on foreign portfolio inflows (FPI) to Colombo Stock Exchange (CSE) Sri Lanka. Design/Methodology/Approach: This Study is based on secondary and time series data. This study uses 8 years monthly data from 2015 January to 2022 November. The data were collected from the Central Bank report and CSE Data library of Sri Lanka. The study used foreign purchases to measure the study's dependent variable, foreign portfolio investments. Exchange rate, inflation and covid-19 are the independent variables. The VAR, Granger causality test, Variance decomposition and impulse response are used as methods to examine the relationship between Inflation rate, Exchange rate and covid-19 on FPI. Findings: The results show that there is positive significant relationship between Inflation Rate and FPI while in Exchange rate and covid-19 have a negative impact on FPI. Originality: Studies that examine the association between salient macroeconomic effects and foreign portfolio inflows considering the pandemic period are rare in the context of Sri Lanka. Therefore, this study is a first attempt that examine above matter in the context of Sri Lanka.
Impact of Financial Leverage, Size & Asset Structure on Firm Value: Evidence from Non-Financial-Service Firms in Sri Lanka
(Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2022) Dumankorala, H.S.; Gunasekara, A.L.
Purpose: This study aims to identify the impact of financial leverage, firm size, and asset structure on firm value, with a focus on non-financial service firms listed on the Colombo stock exchange. Design/Methodology/Approach: The study is conducted based on quantitative approaches by using financial information from 121 non-financial service firms listed on the Colombo Stock Exchange during the time period from 2018 to 2021 and considering the COVID-19 impact. Regression analysis is used to recognize the impact of financial leverage, firm size, asset structure, and COVID-19 on firm value. This study used financial leverage, firm size, asset structure, and COVID-19 as the independent variables and firm value as the dependent variable. Findings: The results show that financial leverage and COVID-19 have statistically insignificant impact on the firm value, while firm size and asset structure have a statistically significant relationship with firm value at 5% level. Originality: This study supports the expansion of existing knowledge on the topic of the impact of financial leverage, firm size, and asset structure on the firm value of non-financial service firms and helps policymakers develop policies on corporate finance and develop strategies to increase firm value and performance by considering factors affecting firm value.
The Impact of Firm Performance on Market Capitalization in Listed Insurance Companies in Sri Lanka
(Department of Finance, Faculty of Commerce and Management Studies University of Kelaniya Sri Lanka, 2024) Madhusanka, P.G.S.; Gunasekara, A.L.
Introduction: This research investigates into the relationship between firm performance and market capitalization within Sri Lanka's listed insurance sector. Methodology: Key financial indicators, including Return on Equity (ROE), Return on Assets (ROA), Capital Adequacy Ratio (CAR), Current Ratio (CR), and Total Assets (TA) as control variables, are examined using a quantitative approach. This study uses a sample 10 years of data of listed Insurance companies in the Colombo Stock Exchange. This study employs fixed effect panel regression method to investigate the relationship between firm performance and market capitalization. Findings: The findings reveal that Total Assets demonstrate a robust, positive correlation with market capitalization, indicating larger insurers' attractiveness for investment. Notably, ROE emerges as a significant predictor, emphasizing profitability's critical role in assessing growth potential within insurance companies. Conversely, ROA, CAR, and CR do not exhibit statistically significant relationships with market capitalization. The results challenge prevailing hypotheses, indicating that neither profitability nor liquidity substantially influences market capitalization. Conclusion: In conclusion, this research bridges a crucial knowledge gap within Sri Lanka's insurance sector, offering empirically grounded insights for stakeholders. The findings provide a foundation for subsequent research and actionable implications, guiding future investment strategies, regulatory frameworks, and strategic initiatives.
Impact of Integrated Reporting on Firm Value of Listed Companies in Consumer Discretionary Sector in Sri Lanka: Analysis of Moderating Effect of External Financing
(Department of Finance, Faculty of Commerce and Management Studies University of Kelaniya Sri Lanka, 2024) Kodithuwakku, N.R.; Gunasekara, A.L.
Introduction: Integrated reporting is new approach to business reporting that is built around the organization’s strategy to create and sustain value in the short, medium and long term. This process results in the production of a periodic integrated report, which according to the framework issued by the IIRC. This study aims to investigate the impact of integrated reporting on firm value of listed companies in consumer discretionary sector in Sri Lanka by considering moderating effect of external financing. Methodology: This research develops an informative outcome, covering 13 consumer discretionary sector companies listed in the Sri Lankan Stock Exchange from 2015 to 2022. The integrated reporting was measured using content analysis with the support of an integrated reporting developed index and, the firm value was measured by Tobin’s Q. In analyzing the data, the study adopted the panel regression using Stata -13 software. Findings: The study results revealed that integrated reporting has an insignificant positive relationship with firm value, and this relationship is not strengthened in firms with higher needs for external financing. Conclusion: Sri Lankan consumer discretionary sector companies have failed to gain the benefits of integrated reporting yet.
The Impact of Integrated Reporting Practices on the Firm Value of Insurance Companies in Sri Lanka:Analysis of Moderating Effect of External Financing
(Department of Finance, Faculty of Commerce and Management Studies University of Kelaniya Sri Lanka, 2024) Imesha, B. Achila; Gunasekara, A.L.
Introduction: The aim of this study is to evaluate the impact of integrated reporting practices on the firm value in insurance companies in Sri Lanka by analyzing the moderating effect of external financing. Methodology: This study use data of 13 Insurance Companies from 2015 to 2022.The study conducted by using panel regression analysis. The data was obtained from the published annual financial reports of the sampled insurance companies. IR was measured by using content analysis and Tobin’s Q as a proxy for firm value. Findings: The results of the regression analysis revealed that IR positively and significantly effects the firm value in insurance companies in Sri Lanka while supporting the findings of the prior literature. When it is higher the disclosure level of IR company, it will earn a relatively higher firm value. Conclusion: The paper concluded that the IR effects the firm value in Insurance companies in Sri Lanka.
The Impact of Integrated Reporting Quality on Cost of Equity and Financial Performance: Evidence from Licensed Commercial Banks in Sri Lanka
(Department of Finance, Faculty of Commerce and Management Studies University of Kelaniya Sri Lanka, 2024) De Silva, W.A.C.R.; Gunasekara, A.L.
Introduction: This empirical study examines the influence of Integrated Reporting Quality (IRQ) on the Cost of Equity (KE) and financial performance within the context of listed Commercial banks in Sri Lanka spanning the years 2013 to 2022. Despite existing research and literature exploring the link between IRQ, cost of equity, and financial performance in the banking industry, uncertainties persist. Methodology: The study focuses on the top 10 Licensed Commercial Banks in Sri Lanka that adhere to integrated reporting practices. Adopting a quantitative, deductive approach grounded in positivism philosophy, the research utilizes secondary data. Analysis employs quantitative techniques such as descriptive statistics, correlation analysis, and regression analysis to assess hypotheses formulated in response to the research question. STATA software is employed for data analysis, with panel data utilized for the study. Findings: The study incorporates three models: the Return on Assets (ROA) model, Return on Equity (ROE) model, and Cost of Equity (Ke) model. The findings, based on various statistical methods, reveal a positive and statistically significant relationship between IRQ and ROA at the 1% significance level. Additionally, a negative and statistically significant relationship is observed between IRQ and ROE in Licensed Commercial Banks in Sri Lanka at the 5% significance level, along with a negative and statistically significant relationship between IRQ and Ke at the 1% significance level. Conclusion: To enhance Integrated Reporting (IR) practices in Licensed Commercial Banks, recommendations include fostering regular stakeholder engagement, demonstrating value creation through the use of technology, and developing mechanisms for effective communication.
The Impact of Integrated Reporting Quality on Cost of Equity and Financial Performance: Evidence from Listed Insurance Companies in Sri Lanka
(Department of Finance, Faculty of Commerce and Management Studies University of Kelaniya Sri Lanka, 2024) Neththasinghe, N.A.S.; Gunasekara, A.L.
Introduction: This research seeks to empirically establish the connection between Integrated Reporting Quality (IRQ) and the financial performance as well as the Cost of Equity (Ke) within the realm of listed insurance companies in Sri Lanka. Methodology: Data for the study was extracted from the annual reports of these listed insurance companies, covering the period from 2013 to 2022. The gathered data underwent analysis using statistical tools to assess Integrated Reporting Quality and financial performance and in relation to the cost of equity. The study employs panel regression analysis to explore the interplay between Integrated Reporting Quality (IRQ), financial performance metrics, and cost of equity within the specific context of Sri Lankan insurance companies. Findings: The findings reveal a statistically significant negative correlation between Integrated Reporting Quality (IRQ) and the cost of equity (Ke) at a 1% significance level. Furthermore, positive relationships are identified between Integrated Reporting Quality (IRQ) and both Return on Assets (ROA) at a 5% significance level and Return on Equity (ROE) at a 1% significance level. Conclusion: The outcomes of the study offer valuable insights into the role of integrated reporting in evaluating the financial performance and cost of equity within the Sri Lankan insurance sector. Future research endeavors could consider to provide a more comprehensive understanding of the subject. The study holds the potential to assist and inspire insurance organizations to adopt robust Integrated Reporting Quality (IRQ) disclosure practices, benefiting policyholders, regulators, and stakeholders by showcasing governance capabilities and disclosure standards.
The Impact of Integrated Reporting Quality on the Cost of Equity and the Financial Performance: Empirical Evidence from the Diversified Financial Sector in Sri Lanka
(Department of Finance, Faculty of Commerce and Management Studies University of Kelaniya Sri Lanka, 2024) Yapa, L. G. D. D.; Gunasekara, A.L.
Introduction: The aim of this research is to explore the correlation among financial performance, Cost of Equity (Ke), and Integrated Reporting Quality (IRQ) within the context of listed diversified financial institutions in Sri Lanka. Methodology: Employing a quantitative approach grounded in positivism philosophy, this study utilizes a sample spanning from 2013 to 2022. The investigation involves a examination of the annual reports of diversified financial companies listed on the Colombo Stock Exchange to gather the necessary data. Additionally, the study employs panel regression analysis to scrutinize the relationship between IRQ, financial performance metrics, and the cost of equity in Sri Lankan diversified financial institutions. Findings: The statistical analysis, conducted at a 1% significance level, reveals a significant negative correlation between IRQ and Ke. This implies that an increase in integrated reporting quality leads to a reduction in the cost of equity. Positive associations are also identified between IRQ and Return on Assets (ROA) at a 5% significance level and Return on Equity (ROE) at a 1% significance level, validating the reliability of the methodology. Conclusion: These findings contribute to a more comprehensive understanding of how integrated reporting quality can influence the control of the cost of equity and enhance the financial performance of diversified financial institutions in Sri Lanka.
The Impact of Service Quality, Customer Satisfaction, and Corporate Image in Building Customer Loyalty in The Sri Lankan Banking Industry
(Department of Finance, Faculty of Commerce and Management Studies University of Kelaniya Sri Lanka, 2024) Wijerathna, K.G.D.T.U.; Gunasekara, A.L.
Introduction: The banking industry is experiencing intense competition, necessitating the development of strategies to retain existing customers rather than solely focusing on customer acquisition. Cultivating customer loyalty is crucial for the long-term sustainability of banks. This study investigates the impact of service quality, customer satisfaction, and corporate image on customer loyalty within the Sri Lankan banking sector. Methodology: A structured questionnaire was employed to gather primary data from 380 bank customers in the Colombo district. Data collection utilized a Likert-type scale questionnaire administered to randomly intercepted customers exiting banks. Descriptive and inferential statistical techniques were applied to analyze the collected data using the SPSS software package. Findings: The findings reveal a positive and significant impact of service quality, customer satisfaction, and corporate image on customer loyalty. These results imply that banks should prioritize enhancing service quality, ensuring customer satisfaction, and fostering a positive corporate image to cultivate customer loyalty. These findings suggest that banks should focus on improving service quality as a primary strategy for increasing customer loyalty. Banks should also invest in initiatives that enhance customer satisfaction and project a positive corporate image to further boost customer loyalty. Conclusion: Overall, the study's findings provide valuable insights for banks in Sri Lanka on how to cultivate customer loyalty and achieve long-term success in the increasingly competitive banking landscape.
The Impact of the Determinants of Financial Soundness on Firm Performance: Evidence from Listed Finance Companies in Sri Lanka
(Department of Finance, Faculty of Commerce and Management Studies University of Kelaniya Sri Lanka, 2024) Pathirana, H.P.S.S.; Gunasekara, A.L.
Introduction: The success and sustainability of finance companies that play a crucial role in the economic development and stability of Sri Lanka rely heavily on their financial soundness, which is measured through indicators such as capital adequacy, asset quality, profitability, and liquidity. However, there is a research gap in understanding the specific impact of financial soundness on LFC’s performance within the context of Sri Lanka. Methodology: This study examines the impact of financial soundness indicators on finance company's ROE and ROA. Study adopts a quantitative research design, utilizing secondary data and panel regression methods. The sample size includes 09 finance companies over a 10-year period (2013-2022) to ensure adequate representation and diversity. Findings: Higher capital adequacy positively influences ROA but not ROE. Effective NPL management consistently boosts both ROA and ROE. Liquidity has no significant impact, while higher profitability consistently improves both ROE and ROA in listed finance companies in Sri Lanka. Conclusion: The insights contribute to understanding the crucial dynamics between financial soundness and performance in the Sri Lankan finance sector, offering valuable implications for policymakers and industry stakeholders.