Browsing by Author "Madhushani, P.W.G."

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Dividend Policy and Stock Price Volatility: A Study among the Commercial Banks in Sri Lanka
(Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2022) Mathumitha, G.; Madhushani, P.W.G.
Purpose: The main aim of this study is to identify the impact of the dividend policy on stock price volatility in listed commercial banks in Sri Lanka because the volatility of share prices affects the price return of shares (capital gain). Design/ Methodology/Approach: Two key variables; Dividend payout and Dividend yield have been taken as the independent variables after controlling for firm size. The stock price volatility was taken as the dependent variable. Data collection was carried out with a sample of 10 listed Licensed Commercial Banks (LCBs) in Sri Lanka for the period from 2012 – 2019. A Panel regression model was adopted with the random effect model to analyze the impact of dividend policy on stock price volatility. Findings: The results revealed that the Dividend Payout ratio has a significant positive and Dividend Yield has an insignificant negative impact on the stock price volatility of LCBs in Sri Lanka. Originality: The findings suggest that the dividend payout would lead to volatile stock prices. Hence potential and existing investors should focus on banks that have a high payout ratio compared to the earnings generated.
Environmental Accounting Disclosure and Financial Performance: Evidence from Listed Manufacturing and Service Sector Companies in Sri Lanka
(Faculty of Commerce and Management Studies University of Kelaniya., 2024-11-01) Naveendya, J.B.S.; Madhushani, P.W.G.
The most challenging environmental issues that the world is facing today are climate change and global warming, which stem from business operations. Hence, it is the responsibility of the business sector to protect the environment and society. Thus, the observation intends to examine the impact of environmental accounting disclosure on the financial performance of manufacturing and services sector companies listed in the Colombo Stock Exchange, Sri Lanka. The methodology was a quantitative survey approach involving a sample of 28 manufacturing and 17 service sector companies over consecutive financial years from 2012 to 2022. The content analysis technique was used to measure the level of environmental accounting disclosures. The Environmental Accounting Disclosure Index (EADI) was prepared based on eight environmental accounting disclosure items. The regression analysis revealed a significant positive impact of environmental accounting disclosures and the firm’s financial performance of manufacturing companies but not service companies. The results of this study will make it easier for regulators and those who prepare annual reports for highly environmentally sensitive industries to set the foundation for environmental accounting disclosure practices that lead to improved financial performance.
Environmental Accounting Disclosure and Financial Performance: Evidence from Manufacturing and Service Sector in Sri Lanka
(Department of Finance, Faculty of Commerce and Management Studies University of Kelaniya Sri Lanka, 2024) Naveendya, J.B.S.; Madhushani, P.W.G.
Purpose: The most challenging environmental issues that the world is facing today is the climate change and global warming which stem from business operations. Thus, the corporate sector has an obligation to safeguard the environment. The observation intends to examine the impact of environmental accounting disclosure on the financial performance of manufacturing and services sector companies listed in the Colombo Stock Exchange, Sri Lanka. Design/Methodology/Approach: The methodology was a quantitative survey approach involving a sample of 28 manufacturing and 17 service companies over consecutive financial years from 2012 to 2022. The technique of content analysis was used to measure the level of environmental accounting disclosure (EAD). The Environmental Accounting Disclosure Index (EADI) was prepared based on the 8 environmental accounting disclosure items. Findings: Analysis revealed that the level of EAD in the manufacturing sector is stronger than in the service sector. Panel data regression analysis revealed that there is a significant positive impact of EAD on the firm’s financial performance of the manufacturing sector, but no significant impact on service sector companies. Originality: The findings of this study will accommodate for significant policy implications. The corporate sector needs to create the ground for environmental accounting disclosure practices for stakeholder assessment of their performance. Similarly, the effective supervision of the government is important in ensuring the implementation of environmental disclosure that aligns with applicable regulations.
Financial Inclusion and Governance Quality on Human Development: Evidence from Asia
(Department of Finance, Faculty of Commerce and Management Studies University of Kelaniya Sri Lanka, 2024) Warnasooriya, W.M.G.P.G.C.N.; Madhushani, P.W.G.
Purpose: The observation intricates the relationship between financial inclusion, the quality of governance, and their collective impact on human development in Asian countries. The purpose of this study is to analyze the interplay of these factors, considering their dynamic and multifaceted nature. Methodology: In this comprehensive study, panel regression analysis serves as the principal methodology to explore and dissect the intricate interplay between four distinct dimensions of financial inclusion and six dimensions of governance indicators, all within the context of human development. The dataset encompasses 33 diverse Asian countries, meticulously collected over the period spanning 2017 to 2021, with a robust sample size of 165. Findings: Leveraging the analytical power of fixed effect regressions on a panel dataset, results include the Number of commercial bank branches per 100,000 adults, Number of ATMs per 100,000 Adults, Regulatory Quality, Rule of Law, and Voice and Accountability are significant determinants. Therefore, financial inclusion and quality of governance significantly affect human development. Originality: The study's emphasis on the impact of financial inclusion and governance quality on human development underscores the interdisciplinary nature of the study. It bridges the realms of finance, governance, and development studies, offering valuable insights for policymakers, researchers, and practitioners in these fields. The findings of this study could potentially inform strategies for improving both financial systems and governance structures to promote more robust and sustainable human development outcomes.
Financial Literacy and Cryptocurrency Investment Decision among Z Generation in Sri Lanka: With Special Reference to University of Kelaniya
(Department of Finance, Faculty of Commerce and Management Studies University of Kelaniya Sri Lanka, 2024) Kaldera, H.V.B.; Madhushani, P.W.G.
Purpose: This study examines the impact of financial literacy on cryptocurrency investment decisions among Generation Z, focusing on students at the University of Kelaniya, Sri Lanka. The purpose of the study is to provide a nuanced understanding of how financial literacy influences the investment choices of Generation Z in the context of the emerging cryptocurrency market. Methodology: The study employs a quantitative research design using survey instruments to collect data from a sample of students at the University of Kelaniya. The survey includes assessments of financial literacy, subjective and objective measures, as well as cryptocurrency investment decisions. Data are analyzed using structural equation modeling (SEM) in Smart PLS, which allows a comprehensive examination of complex relationships between variables. Findings: Preliminary results show a significant positive impact of financial literacy on cryptocurrency investment decisions among Generation Z. The study also explores the mediating role of the perceived risk, demographic factors such as gender, departmental affiliation, and income in shaping the relationship between financial literacy and investment choices. Originality: The study contributes to the existing literature by providing insights into the cryptocurrency investment decisions of Generation Z in a Sri Lankan university context. The findings of the study are expected to inform educational institutions, policymakers, and financial professionals about the importance of enhancing financial literacy among young investors.
Impact of Economic Indicators on Loan Default : Evidence from the Banking Industry In Srilanka
(Department of Finance, Faculty of Commerce and Management Studies University of Kelaniya Sri Lanka, 2024) Fernando, W.S.H.; Madhushani, P.W.G.
Purpose: The study intends to observe the impact of economic indicators on loan default in Sri Lanka. Methodology: The study was influenced by the Arbitrage Pricing Theory (APT) and the Credit Portfolio View (CPV) model. A quantitative approach was carried out by taking the population as the banking industry in Sri Lanka. Secondary data for the period of 1998-2022 was collected from the Central Bank (CBSL) website. Findings: Time series analysis revealed that the lending interest rate, inflation rate, and currency exchange rate have a positive impact on the default rate while a negative impact of economic growth on the default rate. However, higher lending interest rates significantly increase loan default. Originality: The study recommends that the policymakers, including the CBSL as the main regulatory authority of the financial system to manage the interest rates in a way that benefits the Economy as the high cost of funding has significant shortcomings in the business environment and leading to high credit risk.
Impact of Environmental Management Practices on Financial Performance in Sri Lankan Food and Beverage Industry
(Department of Finance, Faculty of Commerce and Management Studies University of Kelaniya Sri Lanka, 2024) Jayalath, M. G. D. S.; Madhushani, P.W.G.
Purpose: To addresses a crucial gap in understanding the impact of Environmental Management Practices and financial performance in the Sri Lankan food and beverage industry, by focusing on Energy efficiency (EE), Material waste management (MWM) and Water waste management (WWM). The study aims to shed light on how sustainable practices impact the industry's financial outcomes. Methodology: A quantitative research approach was carried out by using secondary data sources such as annual reports and the Colombo Stock Exchange (CSE) website from the period of 2013 – 2022. Financial performance was measured by using Return on Assets (ROA). The chosen sample of ten companies from the CSE provides a specific focus, ensuring in-depth analysis within the context of the local Food and Beverage Industry. Findings: Panel data regression revealed that there is a significant and positive impact of MWM on ROA, highlighting that effective Material Waste Management practices significantly contribute to improved Financial Performance among the selected Sri Lankan Food and Beverage companies. Originality: The study emphasizes the need for businesses to invest in sustainable technologies, energy-efficient equipment, and material waste reduction solutions to enhance both environmental sustainability and financial outcomes.
Impact of Intellectual Capital on Financial Performance of Insurance Industry Sri Lanka
(Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2021) Kulathunga, K.L.M.; Madhushani, P.W.G.
Introduction: The aim of this study is to identify the impact of intellectual capital on the financial performance of Insurance corporations in Sri Lanka, as there is a lack of studies in this industry though it is a major component of the Economy. Design/Methodology/Approach: The research methodology is a quantitative approach, where the secondary data were gathered from the period of 2016 to 2020 by taking twenty major Insurance companies covering more than 60% of the market capitalization. Findings: According to the multiple regression analysis undertaken through STATA software, it was found that Structural Capital Efficiency (SCE) and Physical Capital Efficiency/ the Capital Employed Efficiency (CEE) have a significant impact on the dependent variable, Asset Turnover Ratio (ATO), while Human Capital Efficiency (HCE) does not have a significant impact. The efficiency of capital investment is measured by CEE and found to be the most significant predictor of financial performance. Conclusion: The results depicted a greater impact of capital employed efficiency on financial performance compared to other intellectual capital constituents. These findings would be both conceptually and practically appealing for Insurers to apply knowledge management practice in their institutions. Also, this study would provide some information to the stakeholders and potential investors to assess the value-creating capabilities of selected insurance companies and help decision-makers be aware of the importance of intellectual capital as a key factor that can enhance a firms’ ability to maintain its competitive position
Impact of Non-Interest Income on the Financial Performances of Banks in Sri Lanka
(Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2021) Sandamali, L.A.A.; Madhushani, P.W.G.
Introduction: The focus of this study is to evaluate the impact of non-interest income on the financial performances of banks. Design /Methodology/Approach: This is a quantitative study. Data were gathered among 11 Sri Lankan banks from 2010 to 2020 to analyze the impact of non- interest income on the financial performance. The dependent variable of the study, financial performance was measured by using Return on assets ratio. In order to calculate non-interest income, net commission and fee income has taken as a ratio of operating income. Firm size and the Capital adequacy ratio have been selected as controllable variables of the study. Findings: Results depicted that there is a negative impact of non-interest income on the financial performances of a bank. Total loans and capital adequacy ratio have shown a statistically significant positive impact. Conclusion: In the Sri Lankan context, it is seemed to be that there is a negative influence of non- interest income on the financial performances of banks. Hence, it is suggested to introduce some programmes those can diversify the financial markets by relevant authorities such as Central Bank of Sri Lanka.
The Impact of Taxation on Investment Decisions of Listed Commercial Banks in Sri Lanka
(Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2022) Kavishka, S.A.K.N.; Madhushani, P.W.G.
Purpose: Tax is a compulsory charge by the government. Every country uses a tax system and is compulsory. It has an influence on business decision-making. Hence the main aim of this study was to investigate the impact of corporate tax on the investment decisions undertaken by the Banking sector of Sri Lanka. Design/ Methodology/Approach: Two key variables; the average tax rate and the effective income tax rate were taken as the independent variables after controlling the firm size. The Return on Investment (ROI) was taken as the dependent variable. Data collection was carried out with a sample of 10 listed Licensed Commercial Banks (LCBs) for the period from 2011 to 2020. Findings: The panel regression results revealed that both the average tax rate and the effective income tax rate have a significant negative impact on ROI, mentioning that the reduction of tax rates increases Investment. Originality: The findings suggest that lower corporate tax rates stimulate investment. Hence in Sri Lanka, huge fluctuations in tax policies with the changes of the political parties should be eliminated, and it is needed to establish an appropriate or suitable fiscal system or a tax system in the country that will lead to generating sufficient revenue for the organizations.
Initial Return of Initial Public Offerings (IPOs) and IPOs Underpricing: Evidence from Sri Lanka
(Faculty of Commerce and Management Studies, University of Kelaniya, 2021) Dias, D.S.M.; Wijesinghe, M.R.P.; Madhushani, P.W.G.
Initial public offering is an essential milestone for a company. It has been identified that past studies have not captured the time lag between the end date of the subscribing period, the first trading day and account for the opportunity cost of the investors as well as other market changes. Furthermore, there are limited studies available in the Sri Lankan context. This study aims to identify the factors affecting IPOs initial return and examine the level of underpricing prevailing in the Colombo stock Exchange (CSE). We considered 68 IPOs in CSE from 2006 to 2018 and employed regression analysis. ASPI Return, Sector Price/Earnings ratio, Age, Earnings Per Share, Debt Ratio, Net Asset Value, Return on Asset, Price/Earnings Ratio, Debt/Equity Ratio, Offer Price and Over Subscription Rate were the variables of the study. The results revealed that ASPI return, and oversubscription rate positively influence the market adjusted initial return (MAIR) and offer price is negatively affected. According to the level of underpricing analysis, the prevailing level of underpricing is equal to 14% and 18% for Raw Initial Return (RIR) and MAIR, respectively. Moreover, the Beverage, Food and Tobacco sector, Banking, Finance and Insurance sector and diversified holding sectors are identified as highly underpriced sectors of CSE. The study becomes novel by investigating the time lag between the end date of subscribing period and first trading day and accounting for the investors' opportunity cost and other market changes. The findings are helpful for potential investors, regulators and those who are interested in IPO investment decisions.
Macroeconomics Determinants on Banks Profitability: A Comparative Study between Sri Lanka and India
(Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2022) Wijedasa, W.A.D.I.L.; Madhushani, P.W.G.
Purpose: Banks play a major role in the service sector of a country. The main aim of this study was to examine the impact of macroeconomic variables on the profitability of listed commercial banks in Sri Lanka and India. Design/Methodology/Approach: The study used 10 Commercial banks listed in the Colombo Stock Exchange (CSE), in Sri Lanka, and 19 commercial banks listed in the National Stock Exchange (NSE) in India during the period 2012 and 2021. Gross Domestic Product (GDP), Inflation, and the exchange rate were the key independent variables controlled by the Firm size and the years of operations while Return on Assets (ROA). Research findings: The multiple linear regression analysis revealed that GDP has a significant positive influence on the banks’ profitability in both countries whereas Inflation rates also had a beneficial influence on banks’ performance. Greater levels of inflation rates have resulted in increasing banks’ profitability. The Exchange Rate had a negative and statistically significant impact on Sri Lankan banks’ profitability and a positive statistically significant impact on Indian banks’ profitability. Originality: The results contributed to the existing literature on the macroeconomic determinants and provide a better insight into the Sri Lankan and Indian banking sectors when determining their profitability