9th Students' Research Symposium 2020
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Item The Determinants of Net Interest Margin of Licensed Commercial Banks of Sri Lanka(Department of Finance Faculty of Commerce and Management Studies University of Kelaniya, 2020) Gunasekara, D.A.C.A.; Perera, L. A. S.Introduction – Banking sector plays an essential role in the economy provide smooth infrastructure to financial sector, while transferring the risk characteristics of assets and channelling of funds from surplus parties to deficit parties, that allows entrepreneurs to make their investment without financial difficulties. Therefore, with the higher efficiency, banks would able to maintain the Net Interest Margin (NIM) at a lower level. The banks need to maintain a balance between the profitability and the liquidity. Therefore, to achieve higher profitability banks should maintain higher interest rate margins. To maintain the balance between high and lower NIM the banks should be well aware of the main factors that affect the NIM. Purpose of this paper is to investigate the impact of Bank Specific Factors (BSF) on NIM of LCB’s in Sri Lanka over the period of 2009-2018. Design/Methodology/Approach – The sample in this study includes top 10 license commercial banks which cover the period of 2009-2018. Secondly data obtained from financial statements of individual license commercial banks, central bank annual report and other journals. Findings – This research provide results found that there is a Liquid position in the bank also positive correlation with Leverage level they are maintaining, furthermore non-interest bearing reserves showing negative relationship with management quality relating to bank. Implicit payments relating to bank also shows positive relationship with management quality. On the other hand, non-performing loans and the interest rate risk in the banking sector negative correlated with liquidity requirement in the banking sector. Furthermore, implicit payments negatively correlated with leverage. Conclusion - The results derived from this study may serve to policymakers for orienting towards issues that are more related to NIM determinants. Greater attention must be paid to capital adequacy, implicit interest payments and management quality.Item Impact of Loan Portfolio Diversification on Performance of Licensed Commercial Banks in Sri Lanka(Department of Finance Faculty of Commerce and Management Studies University of Kelaniya, 2020) Rathnamalala, R. I. B. A. M. I.; Perera, L. A. S.Introduction: The empirical studies provide mixed evidence on the relationship between loan portfolio diversification and loan portfolio concentration with the bank performance. This research study is one of the research that has been carried out for the Sri Lankan context with the main objective of, determine the impact of loan portfolio diversification on performance of licensed commercial banks in Sri Lanka. Design/ Methodology/ Approach: Non probability sampling technique is used to select 10 banks out of 26 licensed commercial bank in Sri Lanka for the period of 2010 to 2019. Data were analysed by using correlation and fixed effect panel regression model. The independent variables of product wise diversification and sector wise diversification calculated from the measurement of Hirschman Herfindahl Index. Return on asset has taken to measure the bank performance and Interest Rate Spread, Capital Adequacy, Liquidity and Bank Size are used as control variables for identifying the model. Findings: There is a significant negative impact on product wise loan diversification on bank performance and significant positive impact on sector wise loan diversification on bank performance. Further, control variables of interest rate spread and bank size have a significant negative relationship with bank performance while Capital Adequacy has a significant positive relationship with bank performances. Conclusion: According to the product wise loan diversification bank can earn more profit from concentration strategy while under the sector wise loan diversification bank performance can be improved by following diversify strategy.Item The Impact of Government Debt on Economic Growth in Sri Lanka(Department of Finance Faculty of Commerce and Management Studies University of Kelaniya, 2020) Paranayapa, P. T. S.; Perera, L. A. S.This study is conducted to analyse the impact of government debt on economic growth and to determine the threshold level of government debt; in other words, a sustainable level of debt for Sri Lanka. Also to study the government debt behaviour over the past decade and to examine foreign financing disbursements and utilization. Regression models used time series data covering the period from 1970 to 2019. This study applies ordinary least-squares regression to analyse the impact of government debt on economic growth in Sri Lanka. The discrete threshold regression model is used to determine the government debt threshold level for Sri Lanka. According to the research findings, government debt has a negative and a significant impact on economic growth in Sri Lanka. The estimated optimal government debt threshold level is 71.82 percent of GDP. During the second term of Rajapaksa government, in nominal terms domestic debt was increased by 82 percent, whereas during Sirisena government the same was increased by 52 percent. Over the period from 2010 to 2017, foreign debt stock/GDP was lower than the domestic debt stock/GDP of the same period. However, in 2018 and 2019 foreign debt stock/GDP and domestic debt stock/GDP was evenly poised. During the period from 2013-2019 major portion of the disbursements was allocated to the transportation sector, water supply and sanitation, power and energy, education and training and health and social welfare. This study confirms an existence of high government debt burden in Sri Lanka. Therefore, the Central Bank of Sri Lanka, Ministry of Finance, Foreign Ministry and other responsible government authorities should formulate effective debt management strategies that can be implemented to reduce the debt liabilityItem Impact of Export Diversification / Specialization on Economic Growth: Evidence from Asian Countries(Department of Finance Faculty of Commerce and Management Studies University of Kelaniya, 2020) De Silva, M. R.V.; Perera, L. A. S.Export led growth strategy has become a major concern of economic policy makers of developing countries to achieve their economic growth objectives. In this respect the export diversification and specialization has become a major concern to achieve higher and sustainable economic growth. The study attempts to find the impact of export diversification and specialization on economic growth of developing countries. The main purpose of this study is to understand the impact of export diversification and specialization on the economic growth in developing countries of the Asian region and to identify the most suitable method to achieve higher economic growth The export herfindahl concentration index is the main variable used in this study as a proxy to measure the effect of export Diversification and concentration on economic growth. The Study has employed GMM panel estimation method to analyse the data of 33 developing countries in Asian region for the period of 1995 to 2019 at an annual frequency. The study has found a negative and significant impact between export herfindahl concentration index (H) and the GDPPC growth of the selected developing countries. In light of the findings it can conclude that the export diversification may lead to higher and sustainable economic growth in developing countries.Item Impact of Fiscal Policy on Economic and Social Factors in Sri Lanka(Department of Finance Faculty of Commerce and Management Studies University of Kelaniya, 2020) Wijewardana, M. A. D. P. P.; Perera, L. A. S.Fiscal policy is the use of government taxation and spending to direct the economy. Sri Lankan Government also use fiscal policy to influence the overall demand level of the economy to achieve economic objectives and social variables. The objective of this study was to assess the impact of fiscal policy changes on economic and social variables in Sri Lanka. This is a quantitative study conducted using secondary data sources. This study was carried out by using secondary data sources of Annual Reports of Central Bank and World Bank data of Sri Lanka. Data for the time series from 1985 to 2019 was used to carry out this study. Data analysis was done by using both descriptive analysis and inferential statistics. The hypotheses were tested using linear regression analysis and it was concluded that there is no significant impact of government revenue on GDP Growth, Budget Deficit, General education and Public Health. The hypotheses were tested using linear regression analysis and it was concluded that there is no significant impact of government revenue on all economic and social factors. Also there is a significant impact of government expenses on all economic and social factors. Further research reveal that budget deficit has a positive impact with government expenditure and negative impact with tax revenue. There is a negative impact with GDP growth and government expenditure, and there is a positive impact between GDP Growth and tax revenue. And so on General education has a positive impact with government expenditure, negative impact with government revenue. Public health has a negative impact with government expenditure, positive impact with government tax revenue. According to depth statistical analysis of this study it can be concluded that government expenditure is significantly impact to achieve both economic and social factors than government revenue.Item The Impact Between Business Firm Characteristics and Dividend Distribution: Evidence from Colombo Stock Exchange(Department of Finance Faculty of Commerce and Management Studies University of Kelaniya, 2020) Bandara, D. K. B. L.; Perera, L. A. S.In Sri Lankan context there are numerous studies conducted on this field of examining the impact between business firm characteristics and dividend distribution but results of those researchers have provided contradictory conclusions. Therefore, the main objective of the current study is to identify Sector wise “impact between business firm characteristics and dividend distribution decisions of firms in Sri Lanka”. This study incorporated dividend distribution decision generated through dividend payout ratio as dependent variables and as business firm characteristics such as, financial leverage, firm size, profitability, liquidity, and ownership of a firm as explanatory variables. E-Views package was used to process the secondary data collected from 2015-2020 related to 10 sectors classified under GICS based on data availability. Researcher used panel least square model as the main analysis of the study. Test statistics indicate that, there is significant effect from business firm characteristics on dividend distribution decision in material sector, capital goods sector, healthcare sector, and utility sector, retailing sector and diversified finance sectors, consumer service and food and beverage sector respectively. Furthermore, result also indicate that there was not any effect to consumer durable sector and real estate sector from the selected study variables. This study fulfils the existing research gap in business firm characteristics impact on dividend distribution in Sri Lanka. These finding will help for future studies related to the similar subject areaItem The Impact of Intellectual Capital on Firm’s Financial Performance: Special Reference to Listed Banks, Diversified Finance and Insurance Companies in CSE(Department of Finance Faculty of Commerce and Management Studies University of Kelaniya, 2020) Wijewardana, D. J. M.; Perera, L. A. S.This research study has been carried out to determine the impact of the Intellectual capital on the firm’s financial performance in the listed banks, diversified finance and insurance companies of the Sri Lanka. This study aims to fill the gap of studying the above-mentioned sub sections listed in Colombo Stock Exchange. This study used VAICTM method to determine firms’ intellectual capital, using Human Capital Efficiency (HCE), Structural Capital Efficiency (SCE) and Capital Employed Efficiency (CEE) as Independent Variables and Return on Equity (ROE) as Dependent variable. The research has adopted non- probability sampling method and selected 12 banks, 20 Diversified Finance Companies and 8 Insurance companies as the sample. Also, random effects regression method has initially used to analyse the collected data. Stata package version 16 was used to run the tests and the regression of the model. Based on the analysed results, Banking Sector VAICTM and ROE has a negative relationship and CEE has positive significant impact on ROE. Diversified Finance sector VAICTM has a positive relationship with ROE and HCE, SCE, CEE has a positive impact on ROE. Insurance sector VAICTM has a positive insignificant relationship. The final result emphasizes that the overall models are statistically significant, and researcher conclude that there is a significant positive impact of CEE on Financial performance of Banking Sector and there is a significant positive relationship of VAICTM components and financial performance of Diversified Finance sector.Item Impact of Trade Openness to Economic Growth: Evidence from South Asian Economies(Department of Finance Faculty of Commerce and Management Studies University of Kelaniya, 2020) Gamage, W. G. N. S .; Perera, L. A. S.The general objective of this study is to examine the relationship between trade openness and economic growth in South Asian countries for period 1990-2019. This study attempts to find empirical evidences on the relationship between international trade and economic growth of South Asia. This research further examines whether South Asia has gained economic benefits from the trade Agreement like SAFTA (South Asian Free Trade Agreement). Data of six South Asian Countries from for a period of 1990 to 2019 is analysed using Eviews. the conceptual framework of the study include independent variables are three proxies for Trade Openness (Export share, Import share, Trade share) and human capital, physical capital, Dummy variable. D1 was the dummy variable for Free Trade Agreement (D1=1 after 2006, and D1=0 before 2006) and this FTA dummy variable aimed to study whether South Asian Countries has gained economic benefits from the trade Agreements. Analysing three models (export share, import share and trade share) In two models (export share and trade share) found that Trade Openness has positive and significant impact to Economic Growth in South Asian Countries. However, the study found that the trade agreement which is consider in this research the south Asian free trade agreement (SAFTA) had not considerable impact to increased economic growth South Asian Countries in the third model. Analysis of three models also found a Human capital has a negative and insignificant impact with GDP growth in South Asian Economies and Physical capital also have positive and significant relationship with economic Growth in South Asia. There is positive and significant relationship between trade openness and Economic Growth in South Asian Countries. Then to increase Economic growth in South Asian Countries, their want to motivate the country’s export sector. South Asian free trade agreement (SAFTA) do not has a considerable impact in increasing economic growth South Asian Countries.Item The Impact of Financial Development on Economic Growth: Study on the South Asian Countries(Department of Finance Faculty of Commerce and Management Studies University of Kelaniya, 2020) Sajeewani, G.A. S.; Perera, L. A. S.In the literature of the development economy recognised different schools of thoughts ranging from bidirectional, uni-directional and no directional relationship between financial development and economic growth. Therefore, this study analyses the relationship between financial development and Economic growth of South Asian countries. This study uses a panel data set for South Asian region over the period 1989- 2019. Parameter estimation in the regression analysis with cross section data is done by estimating the least squares method called Ordinary Least Square (OLS) Normality, Heteroskedasticity, Serial Correlation and Cointegration have been tested for model fitness. The dependent variable Per Capita GDP while independent variables are Broad Money to GDP, Bank Deposits to GDP, Domestic credit to private sector, Total debt service (% of GNI), Net Interest Margin, Private credit by deposit money banks to GDP, and control variables of Real Interest Rate and Gross Capital Formation. The results indicate that Broad Money to GDP, Bank Deposits to GDP, Net Interest Margin, Private credit by deposit money banks to GDP, and control variables of Real Interest Rate and Gross Capital Formation proved statistically significant for Asian Region Economic Growth. Interestingly Domestic credit to private sector, Total debt service (% of GNI), no considerable influence on fostering economic growth which is generally unexpected in South Asian region. The study concludes that Broad money, Bank Deposits to GDP, Domestic credit to private sector, Total debt service (% of GNI), Net interest margin, Private credit by deposits money banks to GDP, and control variables Gross capital formation is yet to have an influential role in significantly promoting economic development and growth in the South Asian region.