Accountancy
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Item Efficiency of small financial institutions in Sri Lanka using data envelopment analysis(2012) Jayamaha, A.In Sri Lanka, the formal rural financial sector comprises a large number of small financial institutions (SFIs). Among SFIs, cooperative rural banks (CRBs) play an important role in meeting the rural credit needs in rural sector in Sri Lanka. CRBs have gained an increasing share of financial assets, which has been particularly helpful for satisfying the growing demand for loans and advances in poor people in the country. However, performance of SFIs in Sri Lanka is less than satisfactory and highly criticised today. Poor performance has been attributed to poor management of assets and consequently, the sustainability of these institutions is uncertain. Moreover, an attention to the efficiency of SFIs in Sri Lanka is more concern to the general public given collapses of several formal and informal SFIs. Hence, aim of this study is to evaluate the overall efficiency of SFIs in Sri Lanka by taking all CRBs operate in Sri Lanka. CRBs established in 1964 and end of 2010 there are 1,933 branches operate in all 25 districts of the country. Data envelopment analysis (DEA) is used to measure efficiency. The study found that the efficiency of CRBs in Sri Lanka have declined during the study period of 2005 to 2010. Further found that there were significant differences in the efficiency of CRBs by geographical locations and the efficient banks are closely associated with size of the Banks. The findings of this study may convince industry decision makers to establish more comprehensive policy settings for promoting particularly, CRBs activities, and overall all SFIs in Sri Lanka’s rural financial sector.Item Best financial practices analysis and efficiency of small financial institutions: Evidence from cooperative rural banks in Sri Lanka(2011) Jayamaha, A.; Mula, J.M.Many small financial institutions (SFIs) in developing countries make great effort to provide efficient services to poor house holders. It is generally accepted that maintaining the best financial practices which are of importance in corporate governance mechanism of institutions, has a close relationship with the efficiency of financial institutions, although they are small. This paper seeks to test best financial practices of cooperative rural banks in Sri Lanka (CRBs) and whether these practices have a significant impact on the efficiency of these institutions. The financial practices of CRBs was assessed using ratios of capital adequacy, liquidity, asset quality, loan to deposit, profitability, loan portfolio yield, operational efficiency, and operational self-sufficiency. The efficiency of CRBs in Sri Lanka was examined by using Data Envelopment Analysis (DEA). Based on the data extracted from CRBs’ financial statements, correlation coefficients showed that several ratios have significant associations with the efficiency of CRBs. This confirms that efficient CRBs maintain best financial practices which contribute to their higher levels of efficiency.