4th SRS - DFIN 2015

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    Impact of Credit Risk Management on Profitability in Commercial Banks in Sri Lanka
    (Department of Finance, Faculty of Commerce and Management Studies, University of Kelaniya, 2015) Udesika, D.M.C.
    Credit risk management in commercial banks has become more important not only because of global financial crisis that was experiencing, but also as a crucial concept which determines banks’ survival, growth and profitability. Since granting credit is one of the main sources of income in commercial banks, the management of the risk related to that credit affects the profitability of the banks. The main purpose of this study is to investigate the impact level of credit risk management on profitability in ten commercial banks in Sri Lanka during the period of 2006 to 2014. For this purpose the study employed regression analysis trough SPSS. The study considered ROE (Return on Equity) as profitability indicator while Non- Performing Loan Ratio (NPLR), Lesser Prudence (LP) and Loans to Deposits (LD) are considered as credit risk management indicators. The findings and analysis reveal that credit risk management has an impact on profitability. The findings reveal that three credit risk management indicators of have a significant negative impact on profitability.
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    Determinants of Non-Performing Loans in Sri Lankan Commercial Banks
    (Department of Finance, Faculty of Commerce and Management Studies, University of Kelaniya, 2015) Amarathunga, A.M.D.O.
    Banks provide a variety of products and services to their customers while delighting them. Banks’ lending activities take a significant place among other activities, and grants attractive credit facilities to their customers to improve their living standards. When consider the performance of the granted loans, the results is not good. Because it’s Non- Performing loan balance has been taken a high value. So, its profitability is reducing continuously. Due to inadequate income generation, banks have faced disability of providing credit facilities regularly. The research is mainly based on the identification of reasons behind the existence of higher NPLHs and outstanding balances in the bank. According to the results loan lending rate and loans to deposits significantly affect for the non-performing loan rate.