ICARE 2022
Permanent URI for this collectionhttp://repository.kln.ac.lk/handle/123456789/25708
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Item Non-performing loans & performance of commercial banks in Sri Lanka: comparison between pre & during covid - 19 pandemic(Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2022) Silva, M.T.M.; Perera, W.T.N.M.The size of non-performing loans (NPLs) plays a key role in the stability of the banking sector of a country. The factors that explain the NPLs contain very important information for banks. This study aims to investigate the relationship between Non- Performing Loans & Performance of Commercial Banks in Sri Lanka as well as the impact of the COVID-19 pandemic on them. For this purpose, secondary data from the banking sector will be used. The independent variable is non-performing loans, and the dependent variable is the performance of commercial banks that will be used in the analysis. Statistical tools will be used to test research hypotheses including individual correlation and regression analysis. Relationship analysis will be used to find the relationship between the independent variable and the linear regression analysis between the dependent variable to examine the impact of non-performing loans on financial performance from 2011 to 2021. The expected findings of the research are that non-performing loans significantly influence the financial performance of commercial banks in Sri Lanka with a negative relationship. And also, non-performing loans are increasing because of the COVID pandemic. Thus, this study will be useful for bank management personnel to create ideas to protect banks from crisis and to enhance the performance of banks.Item Public debt & economic growth: evidence from Sri Lanka(Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2022) Rathnayake, R.W.S.K.; Perera, W.T.N.M.One of the primary macroeconomic indicators that determines a country's standing globally is public debt. The relationship between public debt and economic growth has been extensively studied in several countries, and the effects of public debt on economic growth vary from country to country. Therefore, it is critical to conduct individual studies for each country. As a result, this analysis uses the most recent data available for the past 45 years to determine the relationship between public debt and economic growth in Sri Lanka. This was investigated utilizing econometric approaches and annual time series data from 1977 to 2021 in order to achieve the goal of determining how Sri Lanka's public debt affects economic growth. The normality and unit-roots values of the macroeconomic time series are examined using the Jacque Bera (JB) and Augmented Dickey-Fuller (ADF) tests, respectively. The short-run relationship of variables studied using the Error Correlation Model and the long-run relationship of variables analyzed using the Engel-Ganger residual-based model (ECM). The analysis demonstrates that Sri Lanka's governmental debt has increased during the study period on both public domestic debt and public external debt. Additionally, throughout that time the public external debt grew closer to the public domestic debt. Economic growth is negatively and significantly correlated with public debt, including public domestic debt, public external debt. In comparison to external debt, domestic debt has a strong negative impact on economic growth over the long term. Furthermore, domestic debt has a short-term negative impact on economic growth than external debt. Due to the negative consequences on economic growth and the need of using public debt effectively for Sri Lanka, this report advises the government to set some borrowing limits.Item Income diversification and performance of commercial banks in Sri Lanka(Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2022) Nipun, A.U.G.M.; Perera, W.T.N.M.The general objective of this study is to investigate the impact of income source diversification on the bank performance of Sri Lankan listed commercial banks. This study covers Sri Lankan commercial banks during the sample period of 2012-2021. Ten licensed commercial banks were selected based on the highest market capitalization. The study was done using quantitative research methods with a deductive approach, and the secondary data was gathered from the annual reports of each bank. The performance measures return on equity and return on assets while income diversification is measured by the diversification index. Additionally, four control variables (bank size, financial leverage, growth rate and lending strategy) were used. Panel data regression is used as the main analytical tool as the data set contain cross sections and the time series nature of the data. Based on the findings of the research there is a positive relationship between bank income diversification and bank performance even though the degree of diversification is not at the peak within the Sri Lankan context. The study revealed that bank income sources are diversified significantly in the Sri Lankan banking industry and that both interest and non-interest activities significantly impact positively on bank performance. In contrast, bank growth in the number of branches significantly negatively impacts bank performance. According to the findings of this study, it can be concluded that there is a significant positive impact of income diversification and bank performance in Sri Lanka (Both Return on Assets and Return on Equity).Item Effect of microfinance on profitability of commercial banks in Sri Lanka: comparison between pre & during covid - 19 pandemic(Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2022) Jayasundara, M.G.C.M.K.; Perera, W.T.N.M.Microfinance enables small-scale financial services, such as microloans, savings, insurance, leasing and other financial services to small and medium-size entrepreneurs; Microloans are powerful development instrument that enables the underprivileged and small-scale enterprises who lack access and facilities to traditional banking and capital markets to be provided with the bare minimum of regulatory restrictions. Commercial banks with licenses play a huge and essential part in the country's financial system. With their introduction into the microfinance industry, they increased their contribution towards the financial system's stability and the country's development. State-owned commercial banks provide microloan services for different reasons. Their main focus is to carry out the government's policies such as poverty alleviation objectives. In contrast, private banks mainly focus on seeking a public image or maybe the ultimate objective is to increase profits. Only a few studies addressing the profit motive of commercial banks entering the microloans market could be found in the literature. As a result, the ultimate goal of this study is to determine the influence of microloans on commercial bank profitability and the impact of Covid-19. For measuring, the study acquired secondary data from published annual reports of 24 commercial banks operating in Sri Lanka, including the state banks, across the past 10 years to achieve this research goal. To evaluate and analyze the results, these data were analyzed using regression and exploratory data analysis. Microloans have a favorable link with commercial banks' net interest income and profit before tax, according to data research. In the microloans market, state-owned banks are the most dominant and active participants among commercial banks. They have the largest and most significant microloans portfolio and have made the most money by providing microlending services. The study's key finding was that microloans have a considerable impact on commercial bank profits and also there is an impact of Covid-19 as well. This finding would aid commercial bank decision-makers in their decision-making processes towards their success.Item The impact of working capital management on firms profitability comparison between pre covid-19 situation & during the covid-19 situation selected consumer service companies in Sri Lanka(Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2022) Sandaruwani, W.G.I.; Perera, W.T.N.M.The profitability and liquidity of businesses are significantly impacted by working capital management, which is a critical aspect of financial management. The goal of commercial organizations is to increase shareholder wealth. Companies should manage their long-term and short-term financial resources to maximize shareholder profit, a goal aligned with wealth maximization. Managing working capital effectively and efficiently is crucial given the competitive environment and lack of financial resources. As a result, businesses prioritize managing their working capital. Furthermore, most academic literature has shown that effective working capital management increases firm value. This study examined the impact of working capital management on profitability compared to pre- and during COVID-19 situations using data from listed consumer service companies in the Colombo Stock Exchange from 2014 to 2021. This research will use the return on assets (RoA) to measure the performance of the organization and Days in Inventory (DI), Days Average Receivables (DAR), Days Average Payables (DAP) and Cash Conversion Cycle to measure the working capital management. This research used all listed consumer service companies as the population, and 29 consumer service companies were selected as the sample for the study. Data will be collected from the annual report from 2014 to 2021. In this study, Descriptive analysis, Correlation analysis and regression analysis are used to analyze the data. Accordingly, the findings of this will offer a better understanding of the impact of working capital management on the profitability of a company before and during the COVID situation. The study's findings highlight practical concerns that could help businesses in meeting their existing and future financial demands, control their daily operational activities, and improve both operational and financial performance. The study helps regulators recognize a firm's restrictions during crises so they may react accordingly.Item Relationship between investor rationality and decision making: evidence from CSE(Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2022) Gamage, J.A.; Perera, W.T.N.M.The innovation of the financial industry has seen an increase in financial products. Individual investor-based investing activities have also become common in the Sri Lankan financial industry. Thus, financial managers prioritize clarifying individual investors' investment behaviors and incorporating them into investment decision making. The main purpose of this study is to investigate the relationship between rational decision-making and behavioral biases among individual investors in Sri Lanka. This study mainly investigates the relationship between behavioral biases and rational decision-making by examining two behavioral biases, which are relative differences between self-attribution bias and overconfidence bias by various demographic factors. The behavioral biases have either been identified in previous studies, or their effects on individual investors have been examined. However, no prior attempt has been made to examine the connection between behavioral biases and the capacity for rational decision-making, particularly in the context of Sri Lanka. Data has been collected using a structured questionnaire, and 500 investors in Colombo Stock Exchange have responded from October to November 2022. SPSS Statistics software has been used to test the relationship between rational decision-making and behavioral biases. Findings show that individual investors have both rational and irrational behaviors. The findings of this study are more significant for the new and current investors, policymakers, investment advisors, and bankers especially because of the current economic situation in the country.Item Relationship between tax composition and economic growth: evidence from Sri Lanka(Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2022) Sewwandi, S.A.K.M.; Perera, W.T.N.M.Over the years, economists, policymakers, and researchers have engaged in a heated discussion about how taxes affect production growth. Whether the changes in tax composition have an effect on output growth over the long run is one of the primary topics that has generated more heated discussion in the field of public finance. Less clear findings on the empirical front have been emphasized in the literature. This study's objective is to calculate, within the confines of an endogenous growth model and utilizing time series annual data from 1982 to 2021, the aim of this is to study the Relationship between tax composition and economic growth evidence from Sri Lanka. We testing the Relationship between tax composition and economic growth of Sri Lanka. This analysis makes use of annual time series data for the years 1982 to 2021, which is when Sri Lanka's economic liberalization strategy was put into place. All of the information was gleaned from several editions of the Central Bank of Sri Lanka's annual report. The study also calculates the effects of distortionary and nondistortionary taxation on output growth using data on tax receipts. The theory also suggests that non-distortionary taxation has a negligible effect on growth, whereas distortionary taxes have considerable effects. Therefore, both aggregate and disaggregated data for taxes were taken into consideration in the analysis to determine whether tax structure adjustment was related to the output level. While there is a unidirectional causality running from income taxes, value added taxes, and foreign taxes to production growth, other taxes are caused by output growth, according to the empirical findings of this study. The study also discovered that income taxes and other taxes have negative and statistically significant effects on growth. This reflects the fact that, in addition to income taxes, other taxes, such as taxes on other economic activity, have stifled long-term growth.Item Detection of relationship between earnings management and firm performance: evidence from Sri Lanka(Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2022) Anosan, R.; Perera, W.T.N.M.Earnings management is a newer concept in the Sri Lankan context as there is abundant foreign research that could be seen for the past three decades, most of them check the impact of firm performance on earnings management or test the impact of earnings management. The objective of this study is to find the relationship between earning management and firm performance with eight independent factors: day sales receivables index, gross margin index, asset quality index sales growth Index, depreciation index, leverage index, total accrual to total assets index, value-added productivity and two dependent factors: return on assets and return on equity on detection of the relationship between earning management and firm performance. Data from the entities within the sample will be extracted for ten years from the financial years of 2011/2012 to 2021/2022. The data collection will be done through secondary data sources such as company annual reports, the Colombo Stock Exchange, the Central Bank of Sri Lanka, and firm profiles to detect the relationship between earning management and firm performance. Scores for the ten factors were identified, and their relationship to earning management and firm performance will be measured using the SPSS.Item Prediction of financial distress of listed entities in Sri Lanka using financial ratios(Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2022) Akil, M.A.M.; Perera, W.T.N.M.In the current nature and context in Sri Lanka, it is far more evident that the entities do suffer financial distress. Subsequently, they fail which in terms referred to as corporate failure. Corporate failure is the worst case that an entity or a business could come through; lasting financial distress does lead to such briefed corporate failure; hence predicting the forthcoming financial distress is significant in avoiding corporate failures and shakeouts. With standing with that, the purpose of this study is to develop a model using the devised financial ratios to predict the financial distress of listed entities in Sri Lanka. As a result of the model, built upon the financial ratios could be applied in any context in predicting financial distress at any given time. The study utilizes publicly available data from the corporate annual reports of a total sample of 70 firms which are clustered into two as 35 distressed firms and 35 un-distressed firms which are of similar capacities, listed on the Colombo Stock Exchange spanning 6 years from 2016 to 2021. A total of ten devised financial ratios were used in determining the model and analyzed using Logistic Regression Analysis. Analysis of the statistical testing results indicated that the prediction accuracy of the model consistent with the financial ratios is 77.86% one year before distress. Furthermore, the predictive accuracy of the model in all three years before distress is above 72%. Hence the model is robust in obtaining accurate results for up to three years before failure. The final model includes three financial ratios: working capital to total assets, debt ratio and cash flow from operating activities to total assets as these variables have more explanatory power in predicting financial distress. Therefore, pertaining to the need and the current context, the businesses, investors, employees, suppliers, financial institutions, regulatory agents and auditors can be used from the developed model in Predicting the Financial Distress of Listed Entities in Sri Lanka.