11th Students' Research Symposium 2022
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Item Impact of Macroeconomic Variables on the Performance of the Licensed Finance Companies in Sri Lanka(Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2022) Zoysa, A.I.G.U.; Piyananda, S.D.P.Purpose: This research was undertaken to determine the effect of macroeconomic variables on financial performance of licensed finance companies in Sri Lanka. Design/methodology/approach: This study adopted a quantitative research approach using a sample of 12 licensed finance companies in Sri Lanka for the 10 years’ period. Secondary data on finance performance was obtained from the annual financial reports and Central bank reports. Hypotheses were tested using panel data regression model employing STATA. Findings: The regression results show that foreign reserves and GDP have a positive but not significant impact on the ROA and ROE of licensed finance companies in Sri Lanka. Results indicated that inflation is positively related to the financial performance of licensed finance companies in terms of ROA and ROE. The regression results show that increasing the exchange rate would lead to an increase in the financial performance of licensed finance companies in terms of ROA and ROE. Results indicated that the interest rate has a negative on the ROA and ROE of licensed finance companies in Sri Lanka. Originality: The Sri Lanka Government through the Central bank should come up with policies that create a conducive environment for finance companies to operate in since it will translate to the economic growth of the country. Mainly this study helps industry participants, investors, and regulators. Also, policymakers can use the findings of this study to establish policies that are related to the finance industry.Item Effects of the Exchange Rate Volatility on Financial Performance of Licensed Commercial Banks in Sri Lanka(Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2022) Wasana, W.E.; Piyananda, S.D.P.Purpose: The question of whether there exists a relationship between the volatility of exchange rates and the financial performance of licensed commercial banks in Sri Lanka was the subject of this research. Design / Methodology/ Approach: The study used three types of variables as dependent variable, independent variables, and control variables. Dependent variable was financial performance. The independent variable was exchange rate volatility while control variables were inflation, interest rate, and bank size. Secondary data was collected from the banks’ consolidated financial statements as well as the Central Bank of Sri Lanka. The study used the quantitative approach. The study also used panel data analysis using STATA Software Version 13.0 to aid in data analysis. Findings: The study established the existence of a negative association between exchange rate volatility and banks’ performance as measured by the returns on assets ratio. Negatively association between interest rate and ROA. There is a negative relationship between inflation change and ROA also. The bank size had a positive relationship with financial performance. Originality: Exchange rate volatility had an influence on commercial banks’ financial performance in Sri Lanka during the study period. The co-relation findings portrayed a weak negative connection between the FX volatility and the profits of banks over the study period. The correlation findings a medium negative connection between the interest rate, inflation change, and the profits of banks over the study period. The bank’s total assets increased over the research period. Bank size significantly influenced financial performance at a 95% confidence level. The exchange rate also significantly influences financial performance at a 90% confidence level at a 0.1 significant level.Item Impact of Liquidity Risk on the Performance of Licensed Commercial Banks in Sri Lanka(Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2022) Walpita, W.D.N.P.; Piyananda, S.D.P.Purpose: The objective of this study is to identify the significant liquidity risk factors and the impact of them on both top line and bottom-line performance indicators of commercial banks. Therefore, a bank should endeavor to achieve both sides' goals, which are respectively profitability and liquidity. This study identifies the relationship between several liquidity measurements and their impact on bank performance. Design/Methodology/Approach: The dependent variable, the Return on Total Assets and the Return on Total Equity are used as measures of profitability and to measure the relation between liquidity risk management. The independent variable, which is the liquidity level is measured by using the Liquidity Coverage Ratio, Loans to Deposit, Financial Gap to Total Asset, Cash Reserves, and NPL Ratio. The sample selected by the author is 12 listed commercial banks that are Systematically important banks in Sri Lanka used in data analysis for the period of 2012–2021. Findings: The present study expects to fill the gap in the existing literature of banks on the impact of liquidity risk and macroeconomic determinants on Sri Lankan commercial banks’ profitability by providing new empirical evidence. The results of the present study have significant contributions to the existing stock of literature by comprehensively clarifying and analyzing the current state of Sri Lankan commercial banks’ profitability. Originality: When it comes to making good decisions, the causes of information overload can become a burden, according to this study. The results of this study will therefore aid in managing both financial and non-financial information and assist future researchers in identifying research needs.Item 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.Item The Impact of Service Quality on Customer Satisfaction of State Commercial Banks in Sri Lanka: with Special Reference to Kandy District(Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2022) Madhusanchi, T.G.R.; Piyananda, S.D.P.Purpose: To analyze the impact of service quality on customer satisfaction and investigate the relationship between service quality and customer satisfaction of state commercial banks in Kandy District. Design/Methodology/ Approach: The research study is based on primary data. The structured questionnaire was used as the method of data collection and the sample of this study was selected as 220 customers in state commercial banks in Kandy District. The convenience sampling method was used to make the sampling and quantitative research approach used for this study. Data were analyzed using SPSS software. Mainly, the researcher used frequency distribution, descriptive statistics, correlation analysis, Multicollinearity, and multiple regression analysis was used to measure the research information. Cronbach’s alpha was used to examine the reliability of the data and KMO & Bartlett’s test was used to examine the validity of the data. Findings: The study demonstrates a positive relationship between all service quality dimensions (tangibles, reliability, convenience, responsiveness, and security) and customer satisfaction. It implied that increasing the dimensions of service quality will result in increased customer satisfaction. According to the inter-correlation matrix results, independent variables are not correlated with each other variables. The finding indicates that these five dimensions of service quality (tangibles, reliability, convenience, responsiveness, and security) have a significant impact on customer satisfaction of state commercial banks in Kandy District. Originality: This research is important as it clearly demonstrates that the service quality is influenced by customer satisfaction of state commercial banks in Kandy District.Item 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 handlingItem Impact of Board Structure on Financial Performance: Evidence from Licensed Commercial Banks in Sri Lanka(Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2022) Dinelka, W.P.S.; Piyananda, S.D.P.Purpose: This research studies the impact of board structure on financial performance evidence from Licensed Commercial Banks in Sri Lanka Design/Methodology/Approach: The sample of the study consists of the highest market capitalization ten banks listed in the Colombo Stock Exchange and the data was collected over the period of 2012 to 2021 to determine the impact of board structure on financial performance evidence from Licensed Commercial Banks in Sri Lanka. Return on Asset (ROA), Return on Equity (ROE), and Return on Capital Employed (ROCE) represent the Dependent Variables of the study and Board Size, Board Composition, CEO Duality, and Women Participation in Board (FMB) represent the dependent variables of the study. Panel data regression model is used as cross-sectional and time series nature of data. Findings: Based on the results, Findings also revealed that Board Size, Board Composition, and Women’s Participation on Board significantly impact ROE and ROCE Board Composition negatively affected ROA and it derives Board Structure Characteristics have a significant impact on the Firm’s Financial Performance in Licensed Commercial Banks in Sri Lanka. Originality: The results of the three models are derived from Board Structure Characteristics has a significant impact on firm Financial Performance in Licensed Commercial Banks in Sri Lanka. The Board Size, Board Composition, and Firm Size have a significant impact on Firm Financial Performance, but Women’s Participation in Board (FMB) has an insignificant impact on Firm Financial Performance in Licensed Commercial Banks in Sri Lanka. The findings of the study will guide decision-makers of the banks, potential investors, academics, and other stakeholders in making their strategic planning, profit allocation, and making decisions on the managerial implication of the banking sector.Item The Factors Affecting Foreign Reserves in Sri Lanka: Does the Covid-19 Pandemic Matter?(Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2022) Amarasiri, W.T.H.I.; Piyananda, S.D.P.Purpose: The purpose of the study was to determine the factors affecting Foreign Reserves in Sri Lanka and whether the Covid-19 pandemic has impacted foreign reserves in Sri Lanka. Design/ Methodology/ Approach: To identify the factors that affect foreign reserves the data has been collected from the year 2015 to Month September 2022. To examine the factors affecting foreign reserves, the dependent variables of Export, Import, Exchange rate, Inflation rate, and Covid-19 have been taken as the dummy variable. This study focuses on the factors affecting foreign reserves and whether Covid-19 has a significant impact on foreign reserves special reference to Sri Lanka. The study employed an econometric model to analyze the time series data which are obtained from the Central Bank of Sri Lanka’s Monthly Economic Indicators Reports from 2015 to month of September of 2022 and the sample has been captured as the monthly data. This study uses the Johansen Co- Integration method and Vector Error Correlation term (VECM) to identify the long-run relationship between the foreign reserves and the mentioned macroeconomic factors. Findings: The results indicate that the Export, Import, Exchange rate and Covid-19 situation have a significant impact on foreign reserves in long run. In the short run, the significant variable is only the Export. The unexpected disease of COVID-19, the situation has had a significant impact on the current financial crisis in Sri Lanka. However, the deep financial crisis caused changes in some macroeconomic variables, and in the short run, there may be another factor affecting the changes in foreign reserves. Originality: The study implies the reasons and the finding about that factors in detail and the study found that some dependent variables have a significant impact on foreign Reserves in Sri Lanka.Item The Impact of Internal Control System on Banks’ Performance: with Special Reference to Kandy District, Sri Lanka(Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2022) Manangala, T.M; Sudasinghe, S.L.Introduction: The main objective of the study was to identify how the internal control systems impact the performances of the banks in the Kandy district, Sri Lanka Design/Methodology/Approach: The sample size comprises 122 respondents from licensed commercial banks (People’s Bank, Bank of Ceylon) and 92 respondents from licensed specialized banks (National Savings Bank, Regional Development Bank) representing executive-level employees in the Kandy district. The researcher has used the control environment, control activities, risk assessment, information and communication, and monitoring as independent variables whereas the bank’s performance was the dependent variable. Data were analyzed using correlation analysis and multiple regression analysis. Findings: The findings indicated that the variables of the control environment, risk assessment, information and communication, and monitoring have a significant impact on banks’ performance while control activity has an insignificant impact on banks’ performance of banks. Originality: The management of the organization establish and uphold the highest standards of ethical behavior in the organization and implement awareness programs for staff members, including management, to inform policies and procedures. Also, the managers should design a pertinent organizational structure that includes essential areas of power and responsibility and send a clear message to employees about the significance of controls.Item 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.