Symposia & Conferences
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Item The Impact of Capital Adequacy Ratio on Bank Risk-Taking Behavior: Evidence from Local Commercial Banks in Sri Lanka(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2023) Thilakarathne, U.R.S.; Abeywardhana, D.K.Y.This study investigates the relationship between capital adequacy ratio (CAR) and default risk (DR) among local commercial banks in Sri Lanka. Utilizing a panel dataset spanning from 2012 to 2022, the study employs a random effects regression model to analyze the impact of CAR on DR, controlling for bank profitability (BP), bank size (BS), and bank interest rate (I). The findings reveal a complex relationship between CAR and DR, suggesting that a higher CAR may not always lead to a lower level of default risk. This counterintuitive finding challenges the conventional understanding of CAR as a standalone measure for mitigating risk. The study also identifies a positive and statistically significant relationship between BS and DR, emphasizing the need for enhanced risk management practices, particularly for larger banks.Item The Relationship between Business Life Cycle and Capital Structure: Evidence from Listed Companies in Sri Lanka(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2023) Edirisingha, K.P.S.D.; Abeywardhana, D.K.Y.The determination of the optimal capital structure needs to be done by each company. Capital structure is the balance or ratio between debt and equity capital. One proxy for capital structure is leverage. The well-known theory for determining leverage or capital structure is the pecking order theory. There are many variables that affect the determination of a company’s leverage, so there is no single standard model for determining the leverage or capital structure of the company. One variable that adds to the explanation of the determination of a company’s capital structure is the life cycle, as proposed by (Dickinson, 2011). The company's life cycle is differentiated by its cash flow, including cash flow from operating, financing, and investment. This study aims to determine whether the company life cycle can explain the determination of the leverage or capital structure of the company and find out the influence of other variables such as age of business, growth, tangibility, size, and liquidity on the leverage or capital structure of the company. This paper uses a panel data approach and data collected from listed companies in Sri Lanka between 2012/13 and 2021/22 to investigate the impacts of business life cycle stages on capital structure. This study conducted an analysis using descriptive statistics, correlation, and regression analysis. The results showed that in 2012/13 and 2021/22, the variable of the life cycle can be one of the variables that can explain the company’s decision. The control variables that affect leverage are the age of the business, tangibility, size, and liquidity. The variable that does not affect leverage is the growth of the company.Item Predicting Corporate Failure in License Finance Companies in Sri Lanka(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2023) Pabasara, H.G.R.; Abeywardhana, D.K.Y.The license finance industry in Sri Lanka plays a vital role in providing credit to businesses and individuals. However, the industry is not without risk, as evidenced by the number of LFCs that have failed in recent years. Corporate failure can have a significant impact on the economy, as it can lead to various kinds of negative consequences to the economy as well as to the whole nation. This study aims to develop a model to predict corporate failure in licensed finance companies (LFCs) in Sri Lanka. The Altman Z-Score, a widely used financial distress prediction model, was employed to identify distressed LFCs. To enhance the reliability of the model, the CAMELS rating system, a supervisory rating system for financial institutions, was also used to evaluate the performance of the identified distressed LFCs. The study found that the Altman Z-Score and CAMELS rating systems identified LFCs that were in corporate failure or had lower performance. The findings suggest that both models can be used as early warning systems for identifying distressed LFCs in Sri Lanka.Item The impact of sustainability reporting on firms’ financial performance in pre covid-19 and post covid-19 period: evidence from hotel industry in sri lanka(Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2022) Amalika, O.; Abeywardhana, D.K.Y.The purpose of this study is to review the literature on the impact of business sustainability on financial performance of 30 listed hotels in Sri Lanka. The prior research findings indicate a positive relationship between corporate sustainability and financial performance that is measured by earning per share, debt to equity ratio, return on equity and current ratio. But using the financial data of listed hotel in Sri Lanka, we study the impact of COVID-19 on corporate performance and we show that COVID-19 has a negative impact on firm performance. The negative impact of COVID-19 on firm performance is more pronounced when a firm’s investment scale or sales revenue is smaller. We show, in an additional analysis, that the negative impact of COVID-19 on firm performance is more pronounced in serious-impact areas and industries. These findings are among the first empirical evidence of the association between pandemic and firm performance. The link between company sustainability policies and financial success is gaining traction in research, although a consensus has yet to emerge. As well as the sustainable practices used by the Sri Lanka hotel Industry are examined in this research. From the perspective of the developing world, sustainability is a relatively under-researched concept, and the research in particular lacks evidence from the Sri Lanka hotel industry. The Covid-19 pandemic has posed a number of issues for Sri Lanka's hospitality, restaurant, and tourism industries. During the current Covid-19 outbreak, hotel, restaurant, and tourism businesses will be exposed to a number of potential financial hazards. As a result, study is required to determine the influence of Covid-19 on financial performance by evaluating Financial Statements and applying financial ratios.Item The practice of data analytics for fraud detection in sri lankan finance companies(Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2022) Hathurusinghe, N.H.; Abeywardhana, D.K.Y.This study aims to assess the use of Data analytics for fraud detection of Finance companies in Sri Lanka. Finance institutions spreading their branches over multiple areas by providing more functionality to its customers beyond the existing traditions. Providing Savings and fixed deposit facilities, Gold loan facilities, online functioning facilities, Mobile-based payment platforms, and other electronic payments, etc. All of these new avenues are shifting the Finance companies from the traditionally viewed brick and mortar service companies to technology companies with finance license. The ever-increasing changing landscape of this digitalization has also started generating multiple data from multiple sources across the sector leading to enormous volumes of data and the demand and capabilities of handling such data are ever-increasing. The availability of data has opened a new window for the organizations to use these data in a much more meaningful way to explore new opportunities in the business environment through proactive means. Hence it is more challenging to generate value-added and accurate information for organizations' decision-making purposes and there is a high probability to occur the frauds. In such situation, the study is the purpose to examine the Data analytics against the fraud detection of Finance companies in Sri Lanka by the source of information gathered from the Internal Auditors of the particular finance companies.Item The relationship between public debt and economic growth evidence from Sri Lanka(Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2022) Kumari, K.W.P.P.; Abeywardhana, D.K.Y.At present, Sri Lanka is suffering from the disease of economic decline. For that Sri Lankan Central Bank give a massive support to treat for the illness through correct monetary and physical policy to the blood of Sri Lanka. Under supervision of Central Bank monitoring banking sector also give nutrition to the economy. There for this study aim to determine the impact of monetary policy instruments on bank performance in Sri Lanka, and it could be an ideal suggestion to regulators for constructing monetary policy tools that fulfill the Sri Lankan economy's macroeconomic goal as healthy. Various arguments about the relationship between key factors in various countries may be found in the literature study. However, there is a few studies discuss with different monetary tools related this relationship in Sri Lanka. As a result, this study aims to fill a research gap in Sri Lankan monetary policy instruments and bank performance. Hence this study will mainly test the impact of monetary policy Interest Rate (IR) and Statutory Reserve Ratio (SRR) and performance of the banks to achieve this purpose. This research will use the Return on Equity (ROE) and Return on Asset (ROA) to measure the performance of the banks. In this study, descriptive analysis, Pearson correlation analysis, and regression analysis are used to analyze the data there is a strong relationship between monetary policy instruments and commercial bank profitability measures, implying that appropriate monetary and banking policies are important factors in the commercial banking industry's continued stability and profitability. This research has used all the Sri Lankan banks as the population, and 24 commercial banks were selected as the sample for the study. Data will be collected from annual reports for the period from 2016 to 2021. In here assists in making recommendations to the Central Bank, researchers, and financial institutions regarding financial performance and monetary policy rates, and the Central Bank can also focus on the country's macroeconomic situation.Item Influence of monetary policy on bank performance in Sri Lanka(Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2022) Divanjana, J.D.N.; Abeywardhana, D.K.Y.At present, Sri Lanka is suffering from the disease of economic decline. For that Sri Lankan Central Bank give a massive support to treat for the illness through correct monetary and physical policy to the blood of Sri Lanka. Under supervision of Central Bank monitoring banking sector also give nutrition to the economy. There for this study aim to determine the impact of monetary policy instruments on bank performance in Sri Lanka, and it could be an ideal suggestion to regulators for constructing monetary policy tools that fulfill the Sri Lankan economy's macroeconomic goal as healthy. Various arguments about the relationship between key factors in various countries may be found in the literature study. However, there is a few studies discuss with different monetary tools related this relationship in Sri Lanka. As a result, this study aims to fill a research gap in Sri Lankan monetary policy instruments and bank performance. Hence this study will mainly test the impact of monetary policy Interest Rate (IR) and Statutory Reserve Ratio (SRR) and performance of the banks to achieve this purpose. This research will use the Return on Equity (ROE) and Return on Asset (ROA) to measure the performance of the banks. In this study, descriptive analysis, Pearson correlation analysis, and regression analysis are used to analyze the data there is a strong relationship between monetary policy instruments and commercial bank profitability measures, implying that appropriate monetary and banking policies are important factors in the commercial banking industry's continued stability and profitability. This research has used all the Sri Lankan banks as the population, and 24 commercial banks were selected as the sample for the study. Data will be collected from annual reports for the period from 2016 to 2021. In here assists in making recommendations to the Central Bank, researchers, and financial institutions regarding financial performance and monetary policy rates, and the Central Bank can also focus on the country's macroeconomic situation.Item The impact of credit risk on bank profitability: with special reference to Sri Lankan commercial Banks(Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2022) Wickramasingha, M.P.; Abeywardhana, D.K.Y.Credit granting is one of the main incomes generating activity in commercial banks. The risk related to credit affects the profitability of the banks. A number of researches have also revealed that there is a powerful relationship between credit risk and profitability. The objective of the study is to assess the impact of credit risk on profitability. Foreign countries have conducted number of studies related to this topic. Similarly, there are no sufficient studies have been conducted in Sri Lanka. Four commercial banks were selected for the study and data was collected through the published annual reports of the Central Bank of Sri Lanka (CBSL). The selected four banks consisted with two state owned banks and two private banks from Sri Lankan commercial banking sector. Return on Equity (ROE) and Return on Asset (ROA) were used as profitability indicators while Gross Non-Performing Loan (GNPL) ratio was used as an indicator of credit risk. The impact of credit risk on profitability is assessed using Ordinary Least Square (OLS) regression and exploratory data analysis. Furthermore, results indicated a statistically significant positive relationship between credit risk and profitability of commercial banks. Therefore, the findings concluded that credit risk positively affects the profitability in commercial banks. Findings of this study contribute to formulate efficient and effective credit risk management control policies for commercial banks.Item Board Financial Expertise and Dividend Paying Behavior of Sri Lankan Firms(Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2021) Karunarathna, W.D.N.K.; Abeywardhana, D.K.Y.Dividend behavior is most debatable and inconclusive issue in the corporate finance. Various theories and studies have been developed based on the dividend behavior issues but still the dividend is an unresolved corporate finance problem. Therefore this study aims to use a new dimension called financial expertise on corporate board to explain the dividend policy behavior. Further, this research focus on investigating the relationship between board financial expertise and dividend paying behavior of firms in Sri Lanka. In this study, Lagged Dividend Yield, Proportion of Financial Experts on Board, Firm Size, Companies’ Profitability, Tax Efficiency, Retained Earnings and Leverage are considered as independent variables and Dividend Yield which is measuring the dividend paying behavior of firms is considered as the dependent variable. This study uses correlation and regression analysis to investigate and analyze secondary data of 60 non – financial listed firms which are registered in the Colombo Stock Exchange (CSE) and 420 firm year observations from 2014 to 2020. The findings of this study reveals that financial expertise on corporate board is positively related to dividend payments. Further, the results reveal that Sri Lankan firms use dividends as a control mechanism to mitigate the agency conflict to protect shareholders’ interests. Less attention has been given by the researchers on the board financial expertise as a dividend policy determinant in Sri Lankan context and findings of this study will useful for corporate decision makers, academic students, financial analysts as well as future researchers.Item The Effect of Firm Size on Financial Leverage: Evidence from Sri Lanka(Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2021) Siriwardana, D.B.; Abeywardhana, D.K.Y.Leverage is simply the amount of debt used to finance assets by a company. Firm size, profitability, tangibility, and firm age are some factors that influence financial leverage. Among these, one of the most important factors influencing financial leverage is firm size. The financial leverage of each company is unique, and it varies according to firm size. It has an impact on the firm's value since it determines the best capital structure by balancing the cost of capital and return on investment. There is a debate about the behavior of a firm's financial leverage based on its size and no absolute research study based on the effect of firm size on financial leverage of both manufacturing and service sector companies in the Sri Lankan context. So, this study investigates the effect of firm size on financial leverage of manufacturing and service sector companies in Sri Lanka. The study is conducted quantitatively. Use data from 2015/16 to 2019/20 over five years. The sample consists of 15 manufacturing and 15 service companies that are listed on the Colombo Stock Exchange. The dependent variable is financial leverage, while the independent variable is firm size. The study use firm age, asset tangibility, and profitability as control variables. A regression model is used to analyze data in the study. The study found that firm size is positively and significantly affected to the financial leverage in both manufacturing and service sector companies in Sri Lanka.