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 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.
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.
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 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.
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 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.
Macroeconomics Determinants on Banks Profitability: A Comparative Study between Sri Lanka and India
(Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2022) Wijedasa, W.A.D.I.L.; Madhushani, P.W.G.
Purpose: Banks play a major role in the service sector of a country. The main aim of this study was to examine the impact of macroeconomic variables on the profitability of listed commercial banks in Sri Lanka and India. Design/Methodology/Approach: The study used 10 Commercial banks listed in the Colombo Stock Exchange (CSE), in Sri Lanka, and 19 commercial banks listed in the National Stock Exchange (NSE) in India during the period 2012 and 2021. Gross Domestic Product (GDP), Inflation, and the exchange rate were the key independent variables controlled by the Firm size and the years of operations while Return on Assets (ROA). Research findings: The multiple linear regression analysis revealed that GDP has a significant positive influence on the banks’ profitability in both countries whereas Inflation rates also had a beneficial influence on banks’ performance. Greater levels of inflation rates have resulted in increasing banks’ profitability. The Exchange Rate had a negative and statistically significant impact on Sri Lankan banks’ profitability and a positive statistically significant impact on Indian banks’ profitability. Originality: The results contributed to the existing literature on the macroeconomic determinants and provide a better insight into the Sri Lankan and Indian banking sectors when determining their profitability
The Impact of Board Composition and Ownership Structure on Dividend Policy: Evidence from Sri Lanka
(Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2022) Pramodya, L.A.D.K.; Chathurika, H.L.D.J.
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. Design/Methodology/Approach: This study is used three indicators under the Board composition such as Board size, Board meetings and Board independence and used three indicators under the Ownership structure such as Managerial ownership, Institutional ownership, and foreign ownership. Furthermore, this study considers three control variables such as Firm size, Firm leverage, and Firm profitability. This study employed the Descriptive statistics analysis, Ordinal Logistic regression method and Multinomial Logistic regression method to estimate the regression models. Findings: The major contribution of this study is exploring the impact of Board composition and Ownership structure on the main three dividend policies such as Zero dividend policy, Irregular Dividend policy and Stable Dividend policy. Considering the overall model, the results revealed that Board size, Board meetings and Managerial ownership have a significant impact on the Firm’s Dividend policy. Then the parameter Estimates results are relative to the reference category of the Multinomial logistic regression. Under that Board Size, Managerial ownership and foreign ownership indicated a positive impact and Board meetings, Board independence and Institutional ownership indicated a negative impact on the Irregular dividend policy relative to the Zero dividend policy. On the other hand, Board size, Board Independence, Managerial ownership, and Institutional ownership indicated a positive impact and Board meetings, and foreign ownership indicated a negative impact on the Stable dividend policy relative to the Zero dividend policy. Originality: From the results of this study, practitioners can enhance their ability to make dividend decisions under the main three dividend policies.
Dividend Policy and Stock Price Volatility: A Study among the Commercial Banks in Sri Lanka
(Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2022) Mathumitha, G.; Madhushani, P.W.G.
Purpose: The main aim of this study is to identify the impact of the dividend policy on stock price volatility in listed commercial banks in Sri Lanka because the volatility of share prices affects the price return of shares (capital gain). Design/ Methodology/Approach: Two key variables; Dividend payout and Dividend yield have been taken as the independent variables after controlling for firm size. The stock price volatility was taken as the dependent variable. Data collection was carried out with a sample of 10 listed Licensed Commercial Banks (LCBs) in Sri Lanka for the period from 2012 – 2019. A Panel regression model was adopted with the random effect model to analyze the impact of dividend policy on stock price volatility. Findings: The results revealed that the Dividend Payout ratio has a significant positive and Dividend Yield has an insignificant negative impact on the stock price volatility of LCBs in Sri Lanka. Originality: The findings suggest that the dividend payout would lead to volatile stock prices. Hence potential and existing investors should focus on banks that have a high payout ratio compared to the earnings generated.
Impact of Company Internal Factors on Debt Policy of the Listed Entities in Colombo Stock Exchange
(Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2022) Darshika, K.M.W.; Gunasekara, A.L.
Purpose: This study aims to examine the impact of institutional ownership, managerial ownership, free cash flow, asset structure and dividend policy on debt policy of listed firms by also considering the Covid 19 period. Design/Methodology/Approach: This study uses secondary data, that is, the financial reports of main board companies listed on the Colombo Stock Exchange 2019-2021. Purposive sampling using 92 data is being used in the research. Random effect regression analysis and conventional assumptions are the analysis methods employed in this study. Findings: The findings demonstrate that institutional ownership, free cash flow, and asset structure significantly improve debt policy, whereas managerial ownership and dividend policy have no impact. Originality: The sample period of this study covers the pandemic period. This is a novelty in this study.
Impact of Forensic Audit on Fraud Detection and Prevention of Sri Lankan State Banking Industry: A Qualitative Study
(Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2022) Kaushalya, P.M.I.N.; Piyananda, S.D.P.
Purpose: Forensic audits are the audits that examine and evaluate a firm's or individual's financial records to derive evidence used in a court of law or legal proceeding. This study set out to investigate the effect of forensic audit services on fraud detection in state banks in Sri Lanka. Design/Methodology/Approach: The study was conducted using the Qualitative method and thematic analysis method. The primary data was collected from over 05 interviews with two major state banks. Findings: This research has implications for theory as well as empirical application in business and policy-making areas. It can help the Sri Lankan banking industry upgrade its approaches, identify weaknesses, and compare its detection mechanisms with international firms. Originality: This research will be very useful to those who are seeking information about forensic auditing which is used in the Sri Lankan state banking industry and identifying methods for the banking industry could improve its fraud handling
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 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 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.
Foreign Direct Investment as a Determinant of the Performance of Share Market in Sri Lanka
(Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2022) Sewwandi, N.B.A.A.; Piyananda, S.D.P.
Purpose: The purpose of this study is to examine the factors that affect foreign direct investment and stock market performance. Design/methodology/approach: The quantitative method was applied in this research. This study covers the years 2012 to 2021 and collects monthly data. Focus on the discovery of a long-term relationship between FDI and stock market development in Sri Lanka. And discover that a shock to FDI considerably affects the performance of the stock market in Sri Lanka. The data was collected using the secondary data collecting method, and the Autoregressive Distributed Lag (ARDL) approach was applied to analyze the data in this study. Findings: According to the study's findings, there is a Positive relationship between Sri Lanka's stock market performance and net foreign direct investment. The performance of Sri Lanka's stock market will improve with an increase in foreign direct investment. Originality: Foreign direct investment has a direct and indirect impact on the performance of the stock market, as it can invest directly in shares and open new businesses with the board of investment's approval.
Determinants of Non- Performing Loans in the Banking Sector: Evidence from Sri Lanka
(Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2022) Kumara, G.S.P.; Gunasekara, A.L.
Purpose: In Sri Lankan context, Non-Performing Loans of banks have significantly increased during last few years due to the pandemic, and it has bad effect on bank performance. Nonperforming loans have a negative impact on banks' profits directly. Therefore, this study aims to identify determinants of non-performing loans and banking sector taking evidence from Sri Lanka. Design/Methodology/Approach: The sample of the study consists of 10 banks as included CSE main board in Sri Lanka. 10 years from 2012 to 2021 was used as the period for data collection. All the collected data were analyzed using STATA software, which included statistical tests such as multicollinearity, normality, and panel regression analysis. Finding: The findings show that return on equity ratio had a statistically significant negative relationship with the dependent variable (non-performing loans). while other variables (capital adequacy ratio, loan to deposits ratio, return on assets ratio, public debt as % of GDP, Annual average inflation rate, interest rate) are statistically insignificant. Also, the control variable firm size is statistically insignificant. Hence, banks should focus more on these dimensions while making a concerted effort to reduce non-performing loans. Originality: This study considers the pandemic period and it’s a novelty in this research.
The Dynamic Relationship of Domestic Credit and Stock Market Liquidity of the Commercial Banks on the Economic Growth of the Sri Lanka
(Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2022) Kumara, A.G.D.M.; Gunasekara, A.L.
Purpose: Domestic credit and Stock market liquidity are the most important components of the economy in any country. Both of these two components have been identified as highly impacted factors that affect economic growth in the studies. This study examines the dynamic and significant impact and the relationship between domestic credit and stock market liquidity on economic growth. Design/Methodology/Approach: The researchers use the quantitative research method and positivism philosophy. Researchers have collected secondary data from 2011 to 2021 on the selected research variables from Central Bank and other economic publications for the study. Also, domestic credit and stock market liquidity have been identified as independent variables and economic growth has been identified as dependent variables. Findings: The correlation analysis shows that the domestic credit has a weak negative and significant correlation to economic growth. Further, stock market liquidity has a weak, negative, and insignificant correlation to economic growth. Originality: This study covers the Covid-19 period and it is a novelty in this study.
A Study of Purchasing Power Parity in South Asian Countries
(Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2022) Karunawardhana, S.S.; Weerasinghe, W.D.J.D.
Design/Methodology/Approach: This research explores the validity of the purchasing power parity (PPP) hypothesis utilizing monthly data of South Asian countries throughout the period of 2015 to 2022. This research study is conducted based on secondary quantitative data. Out of the 8 South Asian countries 5 countries were selected as the sample (i.e., Bangladesh, Bhutan, India, Maldives, and Sri Lanka) based on the data availability. In the study, data analysis for short run purchasing power parity is done using the Vector Error Correction Method (VECM). Data analysis for long-run purchasing power parity is done using the co-integration method. Findings: PPP appears to be supported in a panel of South Asian regions, according to panel results. This study also discovered that there is a long-term relationship between price and exchange rate, even while VECM analysis reveals a short-term correlation between exchange rate and price differential as well as a bidirectional causal relationship between price and exchange rate. Originality: Investigations of the validity of purchasing power parity in the South Asian context are relatively limited. Therefore, this study contributed to the dearth of study by adding new knowledge to existing knowledge and filling the empirical gap in the South Asian context.
Determinants of Financial Literacy with Special Reference to Young Adults in Western Province of Sri Lanka
(Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2022) Malavithanthila, M.K.T.N.; Perera, L.A.S.
Purpose: The aim of this study is to investigate and evaluate the factors affecting financial literacy among the young adults of western province of Sri Lanka. The fact that this study expands on the idea of financial literacy and its factors is one of its strengths. Design/methodology/approach: The research has a quantitative survey-based data collection, and it also uses both structural equation modeling (SEM) and Regression analysis. The population of the study is the young adults that is young adults whose age is between 17 to 30 in Western province of Sri Lanka. The sampling method of the study is convenience sampling, and the sample size was determined using Cochran’s formula which is 384.91. Findings: The results of the study showed that the young adults are more confident with financial literacy, financial behavior, financial knowledge, and financial experience whereas they should concentrate more on improving their financial goals, financial decisions and financial wellbeing. With the help of the regression models, it also proved that financial Technology is a new determinant of financial literacy and the model built showed the interrelationship between the financial literacy determinants. Originality: This study fills a gap in the body of knowledge about the several variables that affect financial literacy. It offers data to aid decision-makers in creating plans to improve societal financial literacy.