13th Students’ Research Symposium 2023/2024

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Factors Affecting Financial Distress Among Sri Lankan Young Working Adults in Sri Lanka
(Department of Finance, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka., 2025) Pihanage, P. I. M.; De Zoysa, R. P. S.
Introduction: This study focuses on the factors that influence financial distress, spending behavior, saving behavior, investment behavior, and financial literacy among young working adults in Sri Lanka. Against the backdrop of challenging economic conditions in Sri Lanka, understanding financial behaviors and their impact on financial well-being has become increasingly important. The aim of this study is to determine the factors that contribute to financial distress among young working adults in Sri Lanka, focusing on the relationship between spending behavior, saving behavior, investment behavior, and financial literacy. It attempts to examine how these behaviors and financial literacy affect financial distress in this demographic in Sri Lanka. Methodology: This study uses a quantitative research design to explore the impact of financial behaviors (spending, saving, and investing) and financial literacy on financial distress among young working adults in Sri Lanka. A structured online questionnaire was used to collect data targeting 384 young professionals aged 18 to 34 years in both the public and private sectors. The survey was distributed via Google Forms and the responses were analyzed using SPSS (27) software. The research follows a descriptive analytical approach in a positive model with hypotheses developed based on empirical literature. The sample size was determined using Krejcie and Morgan’s table to ensure statistical rigor. Findings: According to the findings, spending behavior, saving behavior, and investment behavior show a statistically significant impact on financial distress among young working adults. Poor spending habits directly contribute to higher financial distress, while positive savings and investment behaviors help mitigate financial challenges by providing financial security and future growth opportunities. On the other hand, financial literacy did not show a statistically significant impact on financial distress in this study. This suggests that knowledge alone is not enough but is accompanied by active financial practices. Moreover, the variation in financial distress across different groups here further highlights demographic insights. Older respondents (aged 31-35) report higher financial distress due to the pressures of midlife and increased family responsibilities. Married individuals, especially those with children, experience higher levels of financial distress compared to singles, reflecting the economic burden of supporting their families. Moreover, low-income earners face greater difficulties in managing spending and savings, and financial difficulties are inversely related to income levels. Conclusion: The study highlights the critical need for interventions aimed at promoting responsible financial behavior. Targeted financial education programs, practical tools for budgeting, and initiatives to encourage savings and investments can help alleviate financial distress among this demographic. These findings provide valuable insights for policymakers, educators, and financial institutions seeking to enhance the financial resilience of Sri Lanka’s youth workforce.
Impact of Accounts Receivable Management on Profitability: Evidence from the Listed Consumer Discretionary Sector Companies in Sri Lanka
(Department of Finance, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka., 2025) Shalini, A. S. C.; Samarawickrama, A. J. P.
Introduction: This research has aimed to investigate the impact of accounts receivable management on the profitability of the consumer discretionary sector firms in Sri Lanka. The focus is on key ratios such as inventory turnover ratio, average collection period, account receivables turnover ratio, cash conversion cycle, and their association with the profitability measures: including return on asset and return on equity. This research also finds that the firm size moderates these relations as well. Methodology: The paper uses a quantitative method and includes data from 23 white-listed consumer discretionary companies listed in the CSE, within the selected period from 2013 to 2023. In this study, multiple regression analyses are used to examine the effects of accounts receivable metrics on profitability with firm size being a control variable. To improve the validity of results, comprehensive diagnostics are conducted to evaluate conformity with normality, multicollinearity, heteroskedasticity, and autocorrelation tests. The inclusion of only white-listed firms helps to get a sufficient and statistically adequate number to analyze the characteristics of accounts receivable management in this sector. Findings: The findings point to the fact that lower collection periods, or shorter the cash conversion cycles, result in better accounts receivable management and lead to higher profitability as defined by ROA and ROE. It also reveals differences in the performance of receivable management practices across firms, suggesting the existence of distinct financial environments that should be addressed by the corresponding managerial solutions. Conclusion: The significance of accounts receivable management in enhancing the profitability of the consumer discretionary sector is further emphasised in this research finding. It does offer support for viable approaches to enhance sound credit management for enhanced cash flows and profitability. Financial managers and policymakers in the consumer discretionary sector should find these observations helpful in improving accounts receivable management and supervising financial activities. The study adds to the scarce literature in Sri Lanka regarding the understanding of financial management within the consumer discretionary industry and revealed the significance of accounts receivable management in maintaining the financial health of organizations in the country.
Factors Affecting Customer’s Trust in Fintech Services: Evidence from Western Province Licensed Commercial Bank’s Customers in Sri Lanka
(Department of Finance, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka., 2025) Nisansala, W. A. S.; Samarawickrama, A. J. P.
Introduction: The purpose of this research is to identify the factors that affect customer’s fintech services trust in Sri Lanka. Fintech services also mean a set of innovative services offered by financial institutions and supported by advances in information technology. Methodology: The researcher chose the Western Province as the area to conduct the study. In this regard, data was collected from users of fintech services in the Western Province using a survey questionnaire. Perceived risk, perceived reputation, service quality, and perceived regulatory support were used as independent variables in this study, with customer’s trust in fintech services as the dependent variable. Data were analyzed independently using SPSS software, which included statistical tests such as multicollinearity, reliability, normality, and regression analysis. For all the variables, descriptive statistics were used to determine the mean values of respondents' perspectives. Findings: According to the study's findings, perceived reputation and service quality independent variables had a statistically significant positive relationship with the dependent variable of customer’s trust in fintech services. Perceived risk and perceived regulatory support variables are not statistically significant. Independent variables are not correlated with each other, as per the results of the inter-correlation matrix, VIF, and tolerance values, and Cronbach alpha values demonstrate the data is more reliable. According to the regression results, perceived reputation is the most affecting factor in enhancing customer’s trust in the Western Province. Conclusion: The final result highlights that only two variables—perceived reputation and service quality—are statistically significant in developing customer trust in fintech services in Sri Lanka. The researcher suggests regulatory authorities should work toward increasing transparency and public awareness about standards related to compliance to build perceived regulatory support.
The Impact of Environmental, Social and Governance (ESG) Factors on Financial Performance - Evidence from Licensed Banks in Sri Lanka
(Department of Finance, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka., 2025) Dilhani, G. H. M. S.; Dissanayake, D. M. U. H.
Introduction: In this context, the integration of Environmental, Social, and Governance (ESG) factors has emerged as one of the critical determinants of financial performance in banking, especially in emerging markets such as Sri Lanka. The study will try to establish how ESG practices have influenced the financial performance of licensed banks in Sri Lanka, focusing on Return on Assets (ROA) and Return on Equity (ROE). Methodology: This study collected data from 10 licensed banks in Sri Lanka over a sample period of fifteen years, from 2009 to 2023. Using a quantitative approach, this study collected secondary data from the annual and sustainability reports of the selected banks. Environmental, social, and governance (ESG) factors were used as the independent variables of the banks selected. Both Return on Equity and Return on Assets were used to measure the financial performance of the selected banks. Further, bank size, leverage ratio, and dividend yield were used as the control variables. A series of fixed-effects panel regression models was used in this study to analyze the data. Findings: The results of the study revealed that there is a positive and significant impact between Environmental, Social, and Governance (ESG) factors and ROE and ROA, whereas all the other hypotheses were accepted. In conclusion, this study revealed that the ESG factors significantly impact the financial performance of the licensed banks in Sri Lanka. Conclusion: The study concludes that ESG integration is no longer solely a regulatory or ethical requirement but also a strategic imperative for financial performance and competitive advantage. It is encouraged that the licensed banks in Sri Lanka adopt comprehensive ESG frameworks with a view to ensuring sustainability and profitability.
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.
Impact of Bank-Specific Determinants on Capital Adequacy Evidence from Licensed Banks in Sri Lanka
(Department of Finance, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka., 2025) Rashani Sanjana, H. M.; Perera, L. A. S.
Introduction: Capital adequacy assesses a bank’s ability to absorb losses and meet its obligations. Capital adequacy can be expressed as banks’ capital to its risk-weighted assets. Basel Committee on Banks Supervision has imposed the minimum capital adequacy ratio to ensure that banks operate safely. Also, a higher capital adequacy ratio implies that a bank has adequate capital to meet its obligations and unexpected losses. Therefore, increasing the customers' and investors’ confidence. The capital adequacy ratio indicates the financial health of a bank. Methodology: Bank-specific variables such as return on asset ratio (ROA), return on equity ratio (ROE), non-performing loan ratio (NPL), deposit to asset ratio (DR), loan to deposit ratio (LTD), total equity to total liability (EQL), and net interest margin ratio (NIM) on capital adequacy ratio of licensed banks (licensed commercial banks and licensed specialized banks) in Sri Lanka considered independent variables. And capital adequacy ratio is considered a dependent variable. A quantitative research approach was used to conduct this research. As a sample, this research used 6 licensed specialized banks and 10 licensed commercial banks. This study used 13 years (2011–2023) of secondary data to investigate the relationship between capital adequacy ratio and bank-specific variables. A linear regression model was used to analyze the relationship between the capital adequacy ratio and bank-specific variables of licensed banks in Sri Lanka. Further panel data analysis with a random effect model. Findings: The findings show that the return on asset ratio and non-performing loan ratio have a positive and significant impact on the capital adequacy ratio of licensed banks in Sri Lanka. And return on equity ratio has a negative and significant impact on the capital adequacy ratio of licensed banks in Sri Lanka. However, net interest margin, total equity to total liability, deposit-to-asset ratio, and loan-to-deposit ratio haven’t significant impact on the capital adequacy ratio of licensed banks in Sri Lanka. ROA, ROE, and NPL ratios are important determinants of the capital adequacy ratio. So banks need to give much attention to these variables. Conclusion: In conclusion, this study aimed to investigate the relationship between the capital adequacy ratio (CAR) and key bank-specific variables for licensed commercial and specialized banks in Sri Lanka. According to the findings, the return on asset ratio, return on equity ratio, and non-performing loan ratio have a significant impact on the capital adequacy ratio. Therefore, must prioritize improving asset returns (ROA) and effectively managing non-performing loans. Additionally, attention to the return on equity (ROE) is necessary to avoid reducing capital buffers. And findings contribute to the bank managers of both licensed commercial and specialized banks, policymakers, regulators, investors, and customers.
Impact of Cloud Enterprise Resource Planning System Adoption among Listed Manufacturing Companies in Sri Lanka
(Department of Finance, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka., 2025) Pelakatige, E. P. L. S.; Samarawickrama, A. J. P.
Introduction: ERP cloud systems have become an intrinsic part of contemporary business operations to achieve efficiency, decision making, and competitiveness. This present research attempts to explore whether the adoption of cloud ERP results in enhanced performance among Sri Lankan listed manufacturing companies, mainly in ensuring processes are seamless and reducing any lag in operational processes. This research mainly aims to explore the significant factors that affect the successful adoption of cloud ERP systems and investigate their impact on the performance of listed manufacturing firms. It places special focus on top management support, organizational culture, IT knowledge, and business process reengineering as those factors that contribute much to ERP implementation outcomes. Methodology: This study follows a quantitative methodology, where primary data from 35 listed manufacturing companies in Sri Lanka are gathered through structured surveys distributed among key personnel. The response rate of 71% provides a robust grounding for the data. Statistical tools are used in descriptive statistics, correlation analysis, and regression modeling to test the relationship between ERP adoption and organizational performance. This study measures firm performance as the dependent variable while top management support, organizational culture, IT knowledge and business process reengineering are independent variables. Findings: It has been deduced that cloud ERP adoption greatly improves organizational efficiency, enhances the power of decision-making, and brings improvements in financial performance. Critical success factors for successful implementation are top management support and organizational culture, and to some extent, IT knowledge and business process reengineering have been positively related. Cloud ERP systems have tremendous potential for improving operational outcomes and thereby promote competitiveness among manufacturing organizations. Conclusion: The study finds evidence that the adoption of cloud ERP systems has a positive influence on the operational and financial performance of Sri Lanka's listed manufacturing companies. These results provide useful insights to the business leaders and policymakers with respect to the strategic planning of resource allocation for optimizing ERP implementation for long-term benefits.
The Impact of Loan Portfolio Diversification on Bank’s Credit Risk: Evidence from Sri Lanka
(Department of Finance, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka., 2025) Kalpani, W. S. N.; Dissanayake, D. M. U. H.
Introduction: This study investigated the impact of loan portfolio diversification on the risk of commercial and specialized banks in Sri Lanka. Although the impact of credit diversification on enhancing fundamental stability and competitiveness needs to be considered, research on credit portfolio diversification in Sri Lanka is limited. Therefore, this study is helpful in that regard. Methodology: The sample consisted of 12 Domestic banks in Sri Lanka and the research period is 2009–2023. The data for the study is collected from secondary sources, such as the Annual report, CBSL report, and Sustainability report. The research philosophy of this research is positivism. The collected panel data is analyzed using the STATA software. Findings: The findings suggest that product-based diversification of the loan portfolio has a significant impact on NPLR, while industry-based diversification of the loan portfolio does not appear to have a significant impact. These findings may be valuable for banks in managing their capital adequacy, deposit levels, and cost efficiency to improve their financial performance and reduced credit risk. Conclusion: The study investigated impact of loan portfolio diversification on credit risk of banking industry in Sri Lanka. This study analysis has two independent variables, three control variables and two dependent variables. There are non-performing loan ratio and Loan loss provisioning ratio as dependent variable and, as independent variables, there are HHI index of product wise (HHIp) and HHI index of industry wise (HHIs). Here is data analysis through the STATA-13 software. Further research on loan portfolio diversification and its impact on credit risk in the Sri Lankan banking sector could explore several avenues beyond the current study. First, future studies could delve deeper into the role of macroeconomic variables such as inflation, exchange rates and GDP growth. Another area for further research is the impact of non-traditional banking products, such as digital loans and microfinance, on credit risk.
The Impact of Firm-Specific and Macroeconomic Factors on Financial Performance: Evidence from Companies in the Listed Food, Beverage and Tobacco Industry in Sri Lanka
(Department of Finance, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka., 2025) Tharindra, N. B. A. N.; Tennekoon, S. T. M. S.
Introduction: Financial performance is a crucial aspect of assessing a company's overall financial health and can provide insights into its profitability, efficiency, and growth potential. A firm's financial performance is influenced by both internal (micro) and external (macro) factors. The purpose of this study is to examine the impact of firm-specific and macroeconomic factors on the financial performance of companies listed in the food, beverage and tobacco industry in Sri Lanka. Methodology: The population was forty-five listed food, beverage and tobacco firms in Sri Lanka. The representative sample consists of the twenty listed Sri Lankan food, beverage and tobacco companies based on their overall market capitalization. Consequently, ten companies with the highest market capitalization and ten companies with the lowest market capitalization. Firm size, liquidity and leverage were considered as firm-specific factors and interest rate, inflation rate and GDP growth rate were considered as macroeconomic factors. In contrast, the return on assets ratio (ROA) was used to measure the financial performance. Using a quantitative approach, this study collected secondary data from the annual reports of the selected companies from 2014 to 2023. A series of random-effects panel regression model was used to evaluate the hypotheses. STATA software was then used to analyze the data. Findings: The findings showed that firm size and liquidity positively influenced the financial performance of food, beverage and tobacco companies exhibiting the highest level of significance at 1%. The inflation rate is statistically significant at the 5% level, while the GDP growth rate demonstrates significance at the 10% level positively with ROA. However, leverage and interest rate do not emerge as a significant factor and negatively affect for the financial performance of food, beverage and tobacco companies in Sri Lanka. In conclusion, this study revealed that firm characteristics and macroeconomic factors significantly impact the financial performance of food, beverage and tobacco industry in Sri Lanka. Conclusion: This research offers crucial insights for policymakers, investors, and management teams in Sri Lankan food, beverage, and tobacco companies. The findings provide strategic guidance for improving financial performance, particularly for food, beverage and tobacco companies operating in similar macroeconomic conditions, supporting informed decision-making and fostering industry growth.
Identifying the Relationship Between Dividend Policy and Stock Prices in the Banking Sector: Evidence from Colombo Stock Exchange
(Department of Finance, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka., 2025) Hewawitharana, B. D.; Samarawickrama, A. J. P.
Introduction: The banking industry supports investment activity, minimizes credit availability, and facilitates the flow of funds, making it the foundation of economic growth. This study aims to empirically test to identifying the relationship between dividend policy and stock prices in the banking sector. Methodology: The study adopts a quantitative approach using a panel dataset spanning 2011–2023 from seven banking companies on the CSE. Secondary data was obtained from the published annual reports. These firms were selected for their consistent dividend declarations over 13 years. Panel data regression models have been utilized to analyze the data as the Hausman test suggest the fixed effect model is the most appropriate for describing the relationship among the variables. EViews 12 analytical software has been used to analyze the data. Findings: The analysis revealed significant relationships between dividend policy and stock prices. Dividend payout ratios exhibited the most pronounced influence on stock prices, while dividend yields showed mixed results. Conclusion: Dividend policy serves as a critical determinant of stock price behavior in the banking sector, highlighting its importance as a strategic tool for both investors and corporate decision-makers. The findings emphasize the need for well-formulated dividend policies to enhance shareholder value, improve market perceptions, and provide guidance in volatile market conditions.
Phycological and demographical factors influencing cryptocurrency investment intention with special reference to the western province people in Sri Lanka
(Department of Finance, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka., 2025) Jayawickrama, K. D. D. T.; Samarawickrama, A. J. P.
Introduction: This research investigates the psychological and demographical factors that influence cryptocurrency investment intentions among people in the Western Province of Sri Lanka. The study takes place against the backdrop of a rising trend towards cryptocurrencies amidst a population group that is actively using digital and financial resources. There is a significant knowledge gap regarding cryptocurrency investment in Sri Lanka. Examining what factors affect this gap and how those factors influence it is critical to promoting informed decision-making and responsible participation in the cryptocurrency market. Methodology: A quantitative research approach was employed, utilizing a structured questionnaire to gather data from 384 respondents in the Western Province. The study examined psychological determinants alongside demographic variables including age, gender, education, and income. Data analysis was conducted using SPSS software to evaluate the relationships between these variables and investment intentions. Findings: The analysis revealed that psychological factors significantly influence cryptocurrency investment intentions, with perceived trust emerging as the most influential variable. Demographic analysis showed that income and education levels positively correlate with investment intentions, while age demonstrates a negative correlation. Gender was found to have a significant but complex relationship with cryptocurrency adoption patterns. Conclusion: The study provides valuable insights into cryptocurrency adoption dynamics in Sri Lanka's developing market context. These findings have practical implications for policymakers, financial institutions, and cryptocurrency platforms in developing strategies for promoting responsible investment practices and market development, helping people to invest wisely and supporting the growth of the market.
The Impact of Firm-Specific and Macro-Economic Factors on Financial Performance: Evidence from Listed Finance Companies in Sri Lanka
(Department of Finance, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka., 2025) Nisansala, E. K. S.; Tennekoon, S. T. M. S.
Introduction: Company performance plays an important role in national economic growth and employment creation in the country. Both macro and microeconomic factors influence a firm’s performance. This study seeks to examine the impact of firm-specific and macroeconomic factors on the financial performance of listed finance companies in Sri Lanka. It tries to find out the various factors which determine the company performance of listed finance companies. Methodology: The study investigates the effect of the inflation rate, interest rate, and gross domestic product (GDP) growth rate, while the firm characteristics were firm size, leverage, and capital ratio. The dependent variable financial performance is measured as return on assets (ROA). The analytical approach involves employing panel data regression techniques using STATA. Data for analysis were sourced from company annual reports and Central Bank reports covering the period from 2014 to 2023 inclusive of both years. There are 35 CSE-listed entities under the diversified financial industry, out of which this study sample contained 33 entities. Findings: According to the findings, the GDP growth rate and inflation rate had a positive and significant effect, while the interest rate had a positive but non-significant effect on the financial performance of listed finance companies in Sri Lanka. Second, the firm characteristics demonstrate that firm size had positive and significant effects on return on assets (ROA) while leverage had a negative significant effect on return on assets (ROA). Conclusion: This research provides valuable insights to policymakers, professionals in finance, and management teams of finance companies in Sri Lanka. This study adds to the existing literature on how internal and external variables influence company outcomes by analyzing the effect of firm-specific and macroeconomic factors on financial performance using return on assets as a measure.
Exploring the Impact of Fintech Literacy, Smart BNPL Solutions (Koko App and Credit Cards), and Financial Wellbeing on Consumer Buying Behavior in the Colombo District, Sri Lanka
(Department of Finance, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka., 2025) Wanigasuriya, W. D. H. D.; Perera, L. A. S.
Introduction: This study investigates the impact of Fintech literacy, smart BNPL solutions (Koko App and credit cards), and financial wellbeing on consumer buying behavior in the Colombo district, Sri Lanka. This research highlights how these variables impact consumer behavior. Methodology: The research employs a quantitative methodology, using structured questionnaires to collect data from 419 respondents within the Colombo district. Key variables—Fintech literacy, smart BNPL solutions (Koko App and credit cards), financial wellbeing, and consumer buying behavior—were measured using validated scales. Statistical techniques, including correlation and regression analyses, were applied to evaluate the impact of the independent variables on dependent variables and test the proposed hypotheses. Findings: The study reveals significant positive impact of independent variables on consumer buying behavior. Smart BNPL solutions (Koko App and credit cards), Fintech literacy, and financial wellbeing are positively impacting consumer buying behavior, demonstrating that increased financial knowledge and stability promote responsible financial decisions. Conclusion: This research underscores the pivotal role of Fintech literacy, BNPL adoption, and financial wellbeing in shaping consumer purchasing decisions. The findings provide actionable insights for policymakers, financial institutions, and educators to enhance the adoption and effectiveness of technology-driven financial solutions. Future studies could explore demographic influences, longitudinal trends, and psychological factors to build a more comprehensive understanding of consumer buying behavior in the digital financial landscape.
The Impact of Industry-Specific Factors on Non-Performing Loans: “Evidence from Licensed Banks and Finance Companies in Sri Lanka”
(Department of Finance, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka., 2025) Sewwandi, B. S.; Dissanayake, D. M. U. H.
Introduction: Diverse studies have been undertaken on different aspects of the industry and their respective impacts on the amount of non-performing loans in licensed banks and finance companies in Sri Lanka. These generalizations apply to every financial institution and concern both profitability and stability. These data will be considered based on quantitative measures that will cover a range of years from 2012 until 2023, which include gross amounts of loans as well as liquidity ratios, loans-to-deposit ratio, return on assets (ROA), size of the bank, and the level of capital adequacy ratio (CAR) as potential explanatory variables for NPL levels among the responding banks in the study. Methodology: The research relies on panel data analysis and regression models. Data was collected from the annual reports of 10 licensed banks and 5 licensed finance companies. The statistical techniques used included normality tests, correlation, regression analyses, and diagnostic checks (e.g., heteroskedasticity, and multicollinearity). Findings: Gross loans, liquidity ratios, and CAR have direct positive effects on NPLs as loan amounts and regulatory capital requirements increase, the risks get higher. In contrast, the loan-to-deposit ratio and ROA exhibit negative relationships with NPLs, which implies that improved profitability leads to fewer loan defaults. Thus, mixed results were given on bank size since larger institutions are linked to higher risks and operational complexity. Conclusion: The results highlight the necessity for fortified risk management, custom credit policies, and enhanced regulatory frameworks to mitigate NPLs. The research adds to the scant literature on dynamics in NPL in Sri Lanka and offers facts for policymakers and financial executives to consider.
The Day of the Week Effect of Stock Returns: Empirical Evidence from the Colombo Stock Exchange
(Department of Finance, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka., 2025) Rupasingha, P. H. P. H.; Madhushani, P. W. G.
Introduction: The purpose of this study is to investigate the Day-of-the-Week Effect on stock returns in the Colombo Stock Exchange (CSE), examining whether specific days consistently exhibit abnormal returns. By analyzing the All-Share Price Index (ASPI) data from 2014 to 2024, the research explores how economic crises, such as the Easter Sunday Attack (2019), the COVID-19 pandemic, and Sri Lanka’s financial collapse (2022), influenced these anomalies. Methodology: Statistical techniques, including Ordinary Least Squares (OLS) regression and unit root tests, confirmed the presence of significant daily return patterns. The data sample consists of daily stock returns of all companies listed on the All Share Price Index (ASPI) from April 2014 to April 2024. The data was analyzed in two distinct periods: pre-crisis (2014–2019) and post-crisis recovery (2019–2024). Secondary data was used and retrieved from the CSE website. Findings: Mondays consistently recorded negative returns across all periods, suggesting a “Monday effect.” Thursdays showed the most significant positive returns, particularly during the post-crisis recovery period (2019–2024). Conclusion: The study confirms the existence of the day-of-the-week effect in the Colombo Stock Exchange, with distinct variations during economic crises and recovery periods. These findings underscore the need for further exploration into behavioural finance and its role in emerging markets. Future studies should include cross-market analyses to broaden understanding and applicability. The study provides recommendations to investors and policymakers; investors can understand these patterns and use them to enhance their trading strategies, optimizing buy-sell decisions based on predicted daily returns. Policymakers can gain insights into market inefficiencies and offer opportunities to improve regulatory frameworks and foster greater stability.
The Determinants of the Demand for Motor Reinsurance in Sri Lankan General Insurance Market
(Department of Finance, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka., 2025) Hettiarachchi, C. K.; Sudasinghe, S. L.
Introduction: This study investigates the determinants of the demand for motor reinsurance in the Sri Lankan General Insurance market, focusing on financial indicators such as return on total assets, growth of gross written premiums, underwriting risk, solvency margin, financial leverage, and reinsurance ratio. The purpose of this study is to identify what are the factors affecting the demand for motor reinsurance in the Sri Lankan General Insurance market. Methodology: The target population of this study was the Sri Lankan General Insurance market. The study applies the quantitative research approach with deductive research logic, and all the secondary data are taken from the annual reports of the General Insurance companies and the IRCSL from 2015 to 2022. Data analyzed by using STATA software, which included statistical tests such as descriptive statistics, diagnostic tests including correlation testing, heteroscedasticity testing, serial autocorrelation testing, cross-sectional dependency, and regression analysis. Findings: The findings of the study highlighted that underwriting risk and solvency margin are the key determinants of the demand for motor reinsurance in the Sri Lankan General Insurance market. Higher underwriting risk drives insurers to cede more risks to reinsurers, supporting the risk-bearing hypothesis. Conversely, companies with stronger solvency margins tend to retain more risks. Conclusions: The study concludes that managing underwriting risk and maintaining robust solvency margins are critical for optimizing reinsurance strategies and structure for the Sri Lankan General Insurance companies.
The Effect of Financial Literacy on Firm Performance Thorough Mediation of Financial Access and Financial Risk Attitude: Evidence from Selected Manufacturing MSME in Ratnapura District
(Department of Finance, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka., 2025) Yatawatta, Y. S. K.; Weligamage, S. S.
Introduction: The study assesses the effect of financial literacy on the growth of manufacturing micro, small and medium enterprises (MSMEs) in Ratnapura District, Sri Lanka while examining access to finance and financial risk as mediating variables. This study is based on the premise that MSME sector is critical in the economic development of a nation through employment creation, growth of the Gross Domestic Product (GDP), and investment in innovations. Even with this significance, financial literacy remains an area of concern especially in as far as the ability of MSMEs to have access to formal financial systems and making rational economic decisions is concerned. Methodology: A quantitative methodology was adopted that used a self-administered structured questionnaire designed for 145 MSME owners/managers. Data were analyzed using SPSS with the aid of regression and mediation analysis using Hayes’ Process Macro. Financial literacy, financial access, financial risk attitude and business performance were measured with the use of verified and standardized constructs. Findings: Having knowledge of finance leads to greater business results through more integration into the economy and a more diversified risk attitude. In addition, MSME loans, credit and other financial services are more accessible as financial education enables better risk assessment. Mediation analysis assists in establishing that financial literacy, firm performance and financial access, and financial risk attitude are all closely interrelated in a cause and effect cycle where each is mediating the other. Conclusion: Financial literacy in the case of owners of MSMEs is crucial in increasing their financial inclusion and risk profile therefore improving the success of their businesses. There is need for financial education, also measures to correct the problem of illiteracy should be taken. Other possible mediating variables and frameworks could be investigated in future studies and other geographical areas or sectors could be incorporated.
The Impact of Digital Finance literacy and financial socialization on Personal Finance management - Evidence from Undergraduates of University of Kelaniya
(Department of Finance, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka., 2025) Kulasekara, K. M. A. Y.; Kethmi, G. A. P.
Introduction: The purpose of this study is to understand the connection between the digital finance literacy and financial socialization on personal finance management among university students in Sri Lanka. Effective personal financial management is the cornerstone of building a secure and prosperous future. As the society continues to embrace the use of digitally enabled financial products, it becomes important to unravel the importance of digital finance literacy particularly for the young people who are in preparatory stages of joining the working world. Also financial socialization which is the socialization of families, peers and cultures affects the financial attitudes and behaviors. Methodology: The study identified a sample of 384 undergraduates at the University of Kelaniya. This study was carried out based on primary data and followed the survey questionnaire research strategy. Digital Finance attitudes, Digital finance knowledge, Digital finance awareness, Parental financial socialization, Peer influence on financial socialization, Media influence on financial socialization were used as independent variables and Personal finance management was used as the dependent variable. The major technique to collect data from the undergraduates was the five-point Likert scale questionnaire. A multiple regression analysis was conducted, and the SPSS statistical package was used to analyze the data. Findings: According to the study's findings, all of six independent variables had a statistically significant positive relationship with the dependent variable among the undergraduates in University of Kelaniya. Independent variables do not influence each other much because the results, inter-correlation matrix, VIF and tolerance values and Cronbach alpha value show all the data is more reliable. In light of the outcomes of the analysis, the authors nod towards the centrality of digital finance literacy and financial socialization, building on the cumulative research evidence. Conclusion: The final result highlights that the overall model is statistically significant, and the researcher suggests that future researchers might consider employing long-term panel surveys to monitor shifts in Digital financial behavior and attitudes over an extended timeframe.
The Impact of Transparency and Disclosure and Financial Distress on the Financial Performance: Evidence from Licensed Commercial Banks in Sri Lanka
(Department of Finance, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka., 2025) Nanayakkara, K. A. D. C. M.; Samarawickrama, A. J. P.
Introduction: Transparency and disclosure and financial distress are the critical factors affecting the financial performance of bank institutions. This research presents the relationship between these factors and the financial performance of commercial banks operating within the Sri Lankan market. The primary aim of this research is identifying the impact of transparency and disclosure and financial distress on the financial performance in licensed commercial banks in Sri Lanka. Methodology: The sample of the research consists with eighteen licensed commercial banks in Sri Lanka for a period of 2014 to 2023. Transparency and disclosure and financial distress were considered as the independent variables of the regression models. The firm performance of the licensed commercial banks was considered as the dependent variable which was measured based on return on assets and return on equity. Descriptive analysis, correlation analysis and panel data regression were engaged to analyze the data in this study. Findings: The findings revealed that transparency and disclosure has a negative and insignificant impact on firm performance measured by return on asset and financial distress has a positive and insignificant impact on return on asset. Also, the analysis revealed that transparency and disclosure has negative and insignificant impact on return on equity and financial distress has a negative and significant impact on return on equity. Conclusion: The study concluded that in Sri Lankan context, transparency and disclosure have a negative impact on return on asset, and financial distress has a negative impact on return on asset. However, these variables have no significant impact on ROA. And the transparency and disclosure and financial distress have a negative impact on return on equity. Financial distress is significant, and transparency and disclosure have an insignificant impact on ROE.
Influence of Company-Specific Factors on Profitability in Life Insurance Companies in Sri Lanka
(Department of Finance, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka., 2025) Wijesinghe, S. R. S.; Sudasinghe, S. L.
Introduction: The purpose of this study is to look into how company-specific factors influence the profitability of Sri Lankan life insurance businesses. It specifically looks at the influence of company-specific factors such as premium income, claim costs, underwriting results, and risk-based capital on profitability. The life insurance market in Sri Lanka confronts considerable hurdles in maintaining profitability, which is critical to the industry's stability and expansion. Methodology: This study uses a quantitative research design using empirical methods built under a positivist paradigm and a deductive methodology. The study uses panel data from ten life insurance companies from 2016 to 2022, using financial data derived from annual reports and IRCSL reports. The research employs a panel data regression model to determine the influence of the stated factors on profitability. Findings: The investigation, which is supported by descriptive statistics, demonstrates substantial correlations between profitability and company-specific factors. Profitability is positively influenced by premium income and risk-based capital, but claim costs have a negative influence. However, underwriting results have little influence on profitability. Conclusion: The research gives critical insights into the financial dynamics of the life insurance industry, highlighting significant factors influencing profitability. It provides stakeholders with direction on how to improve premium income strategies, optimize claims management, and strengthen risk-based capital management in order to improve financial performance and strategic decision-making.