11th Students' Research Symposium 2022

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Impact of Sustainability Reporting Practices on Firm Performance: with Special Reference to Banks in Sri Lanka
(Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2022) Ranathunga, Y.W.H.C.K.; Premarathna, W.G.I.D.; Tennekoon, S.T.M.S.
Purpose: The Impact of Board composition and Ownership structure on Dividend policy is one of the major concerns in Sri Lanka. The main objective of the study is to examine the impact of Board composition and ownership structure on firm’s Dividend policy of 41 listed companies on the Colombo Stock Exchange of Sri Lanka, over the period from 2016 to 2021. Purpose: The objective of this study is to examine the impact of sustainability reporting practices on firm performance in banks in Sri Lanka. Design/Methodology/Approach: The research is quantitative and used deductive research logic, based on secondary data from 20 licensed commercial banks and 04 licensed specialized banks that are registered with the Central Bank of Sri Lanka for seven years from 2015 to 2021. Return on Assets and Tobin’s Q are the dependent variables whereas Sustainability Reporting Score consisting of economic disclosure, environmental disclosure, social disclosure are the independent variables of this study. STATA version 13 Statistical package was used to analyze data using panel regression. Findings: According to the study's findings, environmental disclosure and social disclosure have significant impact on the return on assets, whereas economic disclosures have no significant impact on the return on assets. Further, social disclosures have a significant impact on Tobin’s Q. However, economic disclosures and environmental disclosures have no significant impact on Tobin’s Q. Moreover, the most influencing factor for sustainability reporting practices on firm performance was environmental disclosures. Originality: This study contributes to the existing literature by identifying the current state of sustainability reporting in licensed commercial banks and licensed specialized banks in Sri Lanka and the trend of sustainability reporting in Sri Lanka over the past seven years.
Determinants of Tax Compliance among Small and Medium-Sized Enterprise Owners in Kandy District
(Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2022) Gunarathna, W.M.N.R.; Sudasinghe, S.L.
Purpose: The main objective of the study was to identify the factors that influence tax compliance among small and medium-sized enterprise owners in Kandy District Design/Methodology/Approach: The current study has gathered the primary data from 100 SME owners in the Kandy district by using a questionnaire. The study used descriptive statistics, Pearson correlation, and regression analysis for each of the specific objectives, and data were analyzed by IBM SPSS. Findings: The findings of the research indicated that automation of tax filing, fairness of the tax system, tax awareness, and education had a strong positive correlation to tax compliance. Hence according to regression analysis, those three variables had a great positive impact on tax compliance. Further, the analysis indicates that the operational years, educational level, and income level had a significant effect on tax compliance however, gender did not significantly affect the tax compliance level of SMEs. Originality: While tax evasion leads to budget deficits for the government, tax compliance generates significant cash for the government to fund its projects. In this case, the SMEs, businesses, and individuals will adapt to the constantly evolving tax systems and will get a better understanding of the variables and their interactions with one another in the context of tax compliance.
Determinants of Low Insurance Penetration in the Sri Lankan Life Insurance Market
(Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2022) Arachchi, K.D.G.; Buddhika, H.J.R.
Purpose: Insurance penetration is the most popular measurement in the insurance sector. The main goal of this study is to identify the Determinants of Low Insurance Penetration in the Sri Lankan Life Insurance Market. Sri Lanka has a considerably low insurance penetration when compared with other main south Asian countries. Higher insurance penetration indicates the capability and confidence of the insurance industry. Insurance penetration serves as a benchmark for measuring the progress of the insurance sector. Many studies have been undertaken in the framework of foreign nations, but just a handful in the context of Sri Lanka. Design/Methodology/Approach: It was decided that an insurance penetration research study should be conducted to emphasize the factors of insurance penetration in the Sri Lankan setting. According to previous studies, some independent variables affect insurance penetration, which was Inflation rate, Income, Literacy ratio, and dependency ratio. And the data was gathered over 22 years from 2000 to 2021. This study was conducted as quantitative research and for the analysis of data, this research uses the EWIEWS statistical software to find outs the relationship between the independent variables and the dependent variable (life insurance penetration). Findings: Most of the independent variables are significant to the life insurance penetration in Sri Lanka long run as well as the short run. Not only that, but this study also examines if there is any difference between the pre-war-the post-war and the pre covid and post covid. Originality: This study guided the government of Sri Lanka to focus on factors leading to low insurance penetration ad further weight on those to improve the insurance penetration in Sri Lanka.
Risk Management and Firm Financial Performance: A Study on Listed Insurance Companies in Sri Lanka
(Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2022) Sasikumar, K.; Fernando, J.M.R
Purpose: Risk management is a significant business function, particularly in the insurance sector. Thus, this study examines the effect of risk management on the financial performances of Sri Lankan insurance companies over the period of 2015 to 2021. Design/methodology/approach: Ten listed insurance companies were chosen as the sample of the study. Solvency risk, underwriting risk, liquidity risk and operation risk are the independent variables of the study whereas return on assets and Return on Equity used as the proxies for the dependent variable. This study also examines the moderating effect of firm age in between the risk management and firm performances proxies. Findings: Solvency risk, underwriting risk and operation risk show a significant impact on the insurance company performances. Further, firm Age shows significant moderating effects on the relationship between operational and solvency risk and of Insurance firms' financial performance. Originality: The findings imply that effective management of a firm's operations lowers operating costs, which in turn raises net premiums and improves a firm's success. As a result, this study advise managers, other stakeholders, and directors should use effective risk management strategies to improve financial performance.
Factors Affecting the Banking Adoption Intention of the Amana Bank Customers
(Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2022) Risan, B.M.A.; Kethmi, G.A.P.
Purpose: The country's economic growth is significantly influenced by the banking sector's performance because it is the most important industry in the nation. The difficulties that banks encounter make it difficult for customers to accept banking. In Sri Lanka, Amana Bank was formally established in 2005. The bank has accomplished several noteworthy milestones over the years, but records show that despite its best efforts, it was unable to become the market leader due to a number of obstacles. This study investigates the factors affecting the banking adoption intention of the Amana Bank customers of Sri Lanka. Design/Methodology/Approach: Th study was carried out in the Batticaloa district, and the data collected from 94 consumers using a questionnaire. The bank's customers' purpose to adopt banking was assessed based on their desire to join the bank in the future. Findings: The correlation results showed a substantial positive association between the lack of Shariah governance legislation and the issue of product uniformity and the level of customer awareness of the services. Regression results revealed that the sole factor negatively affecting customers' intentions to adopt banking was a lack of customer awareness of the services. Originality: Good Shariah governance laws are in place at the Amana bank, and product standardization is at a higher level. Consumers, however, have identified the lack of legislation on Shariah governance and the problem of product uniformity as hurdles for Amana bank performance because they are unaware of the banking service. The stakeholder should spend more on advertising to raise consumer knowledge of Amana bank services in order to promote the adoption of Amana bank clients.
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 Relationship between Market Risk and Financial Performance: Evidence from Sri Lankan Public Listed Companies
(Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2022) Lakma, M.A.K.T.; Sudasinghe, S.L.
Purpose: The main objective of the study was to identify how market risk affects the financial performance of Sri Lankan publicly listed companies. Design/Methodology/Approach: The researcher chose a random sample of five sectors from the Colombo stock exchange. A maximum of fifteen companies were selected from the banking, food & beverage, material, capital goods, and diversified financial sectors based on the highest market capitalization. This study is based on the new sector classification (GICS) introduced by the Colombo Stock Exchange, effective January 1, 2020. The dependent variables are Return on Asset (ROA), Return on Equity (ROE), and Market Return while the Degree of Financial Leverage (DFL) has also been used as the control variable. The descriptive analysis, correlation, and regression analysis were carried out using the E-Views 08 software. Findings: The findings of the research indicated that market risk significantly improves financial performance. Even though a few sectors have insignificant negative impacts and insignificant positive impacts, many of the companies exhibited that the market risk significantly positively impacts market return. Originality: The research is beneficial to the investors to make investment decisions based on the sectors.
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.
The Impact of Financial Literacy on Financial Decision-Making in Business: Evidence from Economic Enterprises of Nuwara Eliya Dedicated Economic Center
(Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2022) Jayakumar, M.M.V.; Perera, P.A.S.D.
Purpose: The purpose of this study is to investigate the significant effect of financial literacy and its impact on financial decision making in business of vendors in Nuwara Eliya Dedicated Economic Center. Further, this study explores the impact of subjective financial literacy, financial knowledge and financial background on financial decision making in business. Design/Methodology/Approach: The population of this study consisted of 138 vendors in Nuwara Eliya Dedicated Economic Center. A sample of 131 vendors were selected using convenience sampling technique and primary data was collected through a structured questionnaire. The independent variable of the research is financial literacy with the dependent variable being financial decisions. Financial Literacy consists of three dimensions namely, subjective financial literacy, financial knowledge, and financial background whereas the financial decisions are measured by financing decisions, investment decisions and working capital decisions Data was analyzed using the techniques of correlation, regression and ANOVA by using the IBM SPSS Statistics Version 23 Software. Findings: The results revealed that financial literacy significantly positively impacts on financial decision making of vendors in Nuwara Eliya Dedicated Economic Center. It was further revealed that the vendors who are having a sound financial background or experience in business more than 10 years were successfully managing their business, though they don’t have a sound educational background. Originality: It was revealed that their knowledge on financial matters based on experience has a significant impact on making sound financial decisions. The findings recommend the necessity for effective financial literacy programs focusing especially on financial knowledge to facilitate informed financial decisions of these vendors.
Impact of Exchange Rate Volatility on Sri Lankan Exports: Evidence from Before and During COVID-19
(Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2022) Priyadarshani, Y.M.A.; Dissanayake, D.M.U.H.
Purpose: The main objective of the study was to examine the impact of exchange rate volatility on Sri Lankan exports before and during COVID 19. Design/Methodology/Approach: In this study, the researcher used a quantitative approach. The secondary data were collected from 2010 to 2021 monthly. ARDL approach was used to Analyse the data. Exchange volatility is considered as the independent variable while Exports are used as the dependent variable of the study. Further, COVID 19 was used as the dummy variable. Findings: Based on the ARDL model it shows a negative and positive relationship between Sri Lankan Export and Real effective exchange rate in short and long run periods respectively. Results show evidence of volatility of REERV clustering on import trading activities in Sri Lanka. Originality: No prior study has been conducted to examine the impact of exchange rate volatility on Sri Lankan exports before and during COVID 19.
Moderating Role of Corporate Governance on the Nexus between Capital Structure and Firm Performance: Evidence from Consumer Service Sector
(Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2022) Kodippili, C.U.; Gunasekara, A.L.
Purpose: The purpose of this research paper is to identify the moderating effect of Corporate Governance on the relationship between accounting base financial performance i.e., ROA, and ROE and Capital Structure of 12 consumer service sector firms listed in CSE main board. Design/Methodology/Approach: This study uses secondary data gathered from annual reports for the period of 2012 to 2021. In this study, multiple regression method is used under random effect regression model approach on panel data. Findings: The findings of the research's regression analysis indicate a negative relationship between the ROE and the independent variable of debt equity ratio (DER) and three moderating variables of board composition (BCOM), board size (BSIZE) and CEO duality (CEOD). When consider the moderating effect only CEO duality shows the significant impact to the DER and ROE. When considering return on assets (ROA) as the dependent variable, only DER has a significant impact on ROA. That means only DER that significantly effects on ROA in consumer service sector companies in Sri Lanka. Additionally, the moderating variables are not shown any significantly impact to the ROA. Originality: Considering corporate governance factors as moderating factors is a novelty in this study.
The Relationship between Financial Management Practices and Financial Performance of SMEs in Matale District, Sri Lanka
(Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2022) Wickramasinghe, D.M.A.; Liyanage, M.L.D.C.J.
Purpose: The purpose of this study is to identify what is the relationship between financial Management practices (fixed asset management, working capital management, accounting information systems, financial reporting analysis), and the financial performance of small and medium-sized enterprises in Matale district, Sri Lanka. Design/Methodology/Approach: The independent variables of this study were fixed asset management, working capital management, Accounting Information Systems, and financial reporting analysis and the dependent variable was the financial performance of SMEs, s. All SMEs (2402 SMEs) operating in the Matale district during the year 2021 were identified as the population of this study. Out of that, 120 SMEs were selected as the sample was manufacturing, service, and trade SMEs operating in the Matale district. Data was collected through a structured questionnaire distributed among SMEs functioning in the Matale district. Descriptive statistics and inferential statistics like Pearson correlation analysis and multiple regression analysis were used to analyze data using the SPSS version 26.0. Findings: According to the regression results, there is a significant relationship (β=0.262 p=0.000) between financial reporting analysis and financial performance and there is a significant positive relationship (β=0.300 p=0.000) between working capital management practices and financial performance. Further, there is a significant positive relationship (β=0.221 p=0.000) between fixed asset management and financial performance. There is a significant relationship between (β=-0.247 p=0.000) accounting information systems and financial performance. All significant values are significant at 0.05. Therefore, according to the study, there is a significant relationship between financial information practices and the financial performance of SMEs in Matale district. Originality: This study has discovered a new finding about the relationship between financial Management practices (fixed asset management, working capital management, accounting information systems, and financial reporting analysis), and the financial performance of small and medium-sized enterprises with respect to the Matale district of Sri Lanka.
Impact of Climate Finance Literacy on Investment Decisions among Organizations and General Public in Sri Lanka
(Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2022) Taiba, M.N.F.; Weligamage, S.S.
Purpose: Climate change mitigation and adaptation play an important role in overcoming the climate change challenges faced by Sri Lanka today. But the major issue is the concept of Climate Finance and the importance of investing in Climate Finance is not popular among Sri Lankan people. Proper awareness about Climate Finance should take place to make climate finance an alternative investment source among people in Sri Lanka. So that they could contribute to saving the environment and mitigating climate change. Thus this research examines the literacy and awareness of Climate Finance and Climate finance sources in Sri Lankan people. Additionally, this study hopes to increase Sri Lankans' awareness of climate finance and sources and encourage them to invest in Climate Finance. Design/methodology/approach: The quantitative research approach and deductive design were used in this study by surveying Sri Lankan bank personnel and the general public. Sample of 100 people from locally incorporated banks and financial institutions, a proportion of the general public was chosen for the survey. Investing or not in climate finance is identified as a dependent variable and awareness of climate change, resources, environment, and social impact is included as independent variables. The IBM SPSS Software was used to analyze the data using correlation and regression methods. Findings: According to the objectives of the study Climate finance literacy on investment decisions is examined based on awareness respondents have about climate finance due to personal opinion, awareness of climate change due to environmental and social aspects, awareness of climate finance and climate finance sources has a positive relationship in investing in climate finance. Originality: Despite there being studies focusing on climate change and related policies as well as mitigating and adapting to climate change, limited research has been carried out regarding awareness of climate finance and investing in climate finance sources. Within this context, this study makes an original contribution to the area of climate financing with reference to a developing country like Sri Lanka.
The Impact of Covid-19 Pandemic on the Profitability of Licensed Commercial Banks and Licensed Finance Companies in Sri Lanka
(Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2022) Fernando, W.K.S.; Kethmi, G.A.P.
Purpose: This study is carried out to determine the impact of Covid-19 pandemic on the profitability of Licensed Commercial Banks and Licensed Finance Companies in Sri Lanka and attempts to assess the pandemic’s impact in relation to Covid-19 related variables (number of confirmed Covid cases and lockdown effect), Covid-19 related spillover effects (high Non- Performing Loans and low Capital Adequacy Ratio) and in relation to the financial institution category Design/Methodology/Approach: Three profitability indices, Return on Assets (ROA), Return on Equity (ROE) and Net Interest Margin (NIM) were used as dependent variables and three separate Panel data regression analyses were performed taking data of 23 Licensed Commercial Banks (LCBs) and 33 Licensed Finance Companies (LFCs). Findings: Covid-19 cases showed a negative but insignificant impact on all the three profitability indices, and the lockdown effect was also negative for all three indices and significant (1%) only for ROE. NPL showed a significant impact at 1% for both ROA and ROE with high coefficients of -0.12 and -0.51 respectively, indicating that high NPL was the main cause for the reduction of their profitability during the crisis. Originality: This study is the first attempt in Sri Lanka that considers the impact of the Covid- 19 pandemic on the profitability of two key financial categories by considering both Covid-19- related factors and Covid-19-related spillover effects.
Investigating the Impact of Financial Literacy on the Performance of Micro Enterprises in Gampaha district, Sri Lanka
(Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2022) Fernando, B.R.M.; Abeysekera, R.
Purpose: The micro-enterprise sector continues to be a fundamental inducement for job creation and economic growth in Sri Lanka. About 80 per cent of the economy is provided by the small-scale sector, which shows the importance of harnessing its potential in developing the Sri Lankan economy. It has been established that financial literacy significantly influences whether or not small-scale enterprises succeed. Yet, the exact effect of financial literacy on small-scale enterprise performance has to be fully identified in Sri Lanka, hence the need for the present study. This research study examines the effect of financial literacy (awareness, attitude and knowledge) of managers on the performance of micro enterprises in the Gampaha District, Sri Lanka. Design/Methodology/Approach: Primary data were obtained from micro scale-enterprise managers through structured questionnaires. The data were analysed using Multiple Regression Analysis. Findings: The results revealed a significant effect of financial literacy on firm performance (both financial and non-financial performance). Also, all four financial literacy components (knowledge, behaviour, attitude, and skill) significantly positively affect financial and nonfinancial performance. Originality: This study fills empirical and practice gaps.
The Relationship Between Macroeconomic Variables, Covid-19 Pandemic on Sri Lankan Stock Market Performance
(Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2022) Wijeyaratne, K.S.; Weligamage, S.S.
Purpose: The main objective of the study is to examine the relationship between All Share Price Index (ASPI), selected key macroeconomic variables and the Covid-19 pandemic that prevailed in the last two years in Sri Lanka. Design / Methodology/ Approach: Monthly time series data for Gross Domestic Product (IPI consider as a proxy), Inflation rate (NCPI Index), Interest rate (T-Bill Rate) and Exchange rate (USD exchange rate) and Covid-19 pandemic were used from January 2017 to April 2022. Unit root tests, (ADF, PP and KPSS tests) Johansen Cointegration test and Ordinary Least Square Method are employed. Findings: The result of this study indicated that in the long-run, that there was a significant but negative relationship between IPI and ASPI. The study has not found any significant relationship from Covid-19 neither on the ASPI nor the other macroeconomic variables. However, further analysis showed that even the IPI does not have any significant impact indicating that there is no long-run equilibrium in the model. Originality: The result emphasizes that the relationship between selected macroeconomic variables and the Covid-19 impact towards to ASPI is not significant. During Covid-19 pandemic situation, the stock market activities witnessed negative trends. Some possible facts for these findings could be that due to high volatilities in the stock market in Sri Lanka which emanates from the prevailing economic uncertainty. Further, it has been observed that there were deliberate interferences in operations of a stock market.
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 Monetary Policy on Economic Growth and Unemployment: Evidence from Sri Lanka
(Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2022) Ruwindrika, K.R.S.; Perera, L.A.S.
Purpose: The purpose of this study is to identify what is the relationship between financial Management practices (fixed asset management, working capital management, accounting information systems, financial reporting analysis), and the financial performance of small and medium-sized enterprises in Matale district, Sri Lanka. Purpose: Economic growth and unemployment are some of the major macroeconomic problems in Sri Lanka for decades. In finding answers to these macroeconomic problems governments make use of fiscal policy and monetary policy. Therefore, the primary objective of this study is to examine the effects of monetary policy tools on economic growth and unemployment of Sri Lanka for the period of 1975 to 2021. Design/ Methodology/ Approach: This study focuses on GDP, Unemployment, and monetary policy tools such as Interest Rate, Money Supply and Exchange Rate. Further trade balance, capital formation, labor force and wages are considered as control variables in the study. The annual time series data are collected from 1975 to 2021. Research uses descriptive statistics, correlation, and regression models to analyze the data. Findings: The results show that the inflation rate, interest rate and money supply have a positive and exchange rate has a negative relationship with GDP. Inflation rate and money supply have positive with unemployment, but interest rate and exchange rate have negative relationship with unemployment. Inflation and exchange rates are significant but inflation rate and money supply insignificant with unemployment.
The Impact of Macroeconomic Factors on Economic Growth: Evidence from Asian Frontier Financial Markets
(Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2022) Madhuwanthi, M.A.W.; Dissanayake, D.M.U.H.
Purpose: The main objective of the study was to examine the impact of macroeconomic variables on economic growth in Asian Frontier financial markets. Design/Methodology/Approach: In this study, the researcher used a quantitative approach. The secondary data were collected for the study. The four Asian Frontier financial markets are known as the population of the study. The sample of the study is same as the population. The independent variables of the study are, foreign direct investment (FDI), Government debt (GD), the labor force (LB), inflation rate (IR), and exchange rate (ER) and the dependent variable is Economic growth (GDP). ARDL Approach was used as the data analytical technique. Findings: This study examines the relationship between economic growth and macroeconomic variables in Asian frontier financial markets. Using long-run and short-run analysis, the results reveal both positive and negative significant and insignificant relationships between these variables. Originality: No published prior study has been conducted to evaluate the impact of macroeconomic factors on economic growth in Asian Frontier financial markets.
The Impact of Financial Ratios and Economic Variables on Stock Price
(Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2022) Premathilaka, A.B.B.I.; Kethmi, G.A.P.
Purpose: Various nations have conducted a variety of empirical studies to determine the variables influencing the stock price. Studies from the past demonstrate that both internal and external factors influence stock price changes. This study considers external and internal factors, and the main objective of the study is to examine the Impact of the financial ratios and economic variables on stock prices in Sri Lanka. Design/Methodology/Approach: Under the internal factors Earnings per share, Dividends per share, and Net assets value per share were taken into the study while Inflation, Interest rate, and Exchange rate were considered as the external factors. The sample is 60 companies that are listed in CSE, and the considered time period is 10 years from 2012 – 2021. Findings: Using the random effect model the results revealed that there is a positive relationship between financial ratios Earnings per share, Dividends per share, Net assets value per share and the stock price. Considering all financial variables together, it was revealed that it has a significant impact on the stock price. The overall impact of economic variables on stock price, the result shows a significant impact. The relationship between the economic variables and the stock price has a negative relationship. From the findings, it has been identified that inflation and the interest rate do not have a significant relationship with the dependent variable. Considering all financial ratios and economic variables the results revealed that there is a significant relationship between the independent variables and the dependent variable. Originality: The study considers both Financial and Economic variables which have not been considered for the Sri Lankan context in the recent past.