Browsing by Author "Fernando, P.N.D."

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Business Failure of Small and Medium Enterprises - A Review
(International Postgraduate Research Conference 2019, Faculty of Graduate Studies, University of Kelaniya, Sri Lanka, 2019) Jayasekara, B.E.A.; Fernando, P.N.D.; Ranjani, R.P.C.
Small and Medium enterprises are back born of developed and developing economies around the world. However the sector has not provided desired level of contribution and suffers from high failure rate in worldwide. The main purpose of this study is to critically evaluate the causes of failure of SMEs based on literature. The objectives of this study is to determine the causes of failure of SMEs, critically evaluate the literature on small and medium business failure theories as well as lessons that could be learnt from the existing literature and to determine the methods of improving the business success to achieve sustainable economic development. The methodology used this study to review literature systematically using sample of 95 studies selected from most relevant articles published from 1968-2016 and critically appraised and synthesized findings qualitatively. The Small and Medium business can be failed due to an inability to achieve certain goals due to activating opposition forces, tensions between assets against liabilities, limited access to finance, unbeatable competition, isolation, inadequate staff, wrong pricing, lack of co-operation, technical insolvency, inability to satisfy principal stakeholder’s aspirations, losses to creditors, cessation of operations, termination due to under performance, involuntary change in both the ownership and management of the business owing to poor performance, unable to meet liabilities, not made profit for the previous three years, sale of the firm or personal decision by the owner to accept employment with another firm, fall in revenue, rise in expenses becomes insolvent ,unable to attract new debt or equity funding, cannot continue to operate under the current ownership and management, exiting the economy or not meeting the “performance threshold” of the market, owner’s personalized management style, end state, liabilities exceeds the value of the company’s available assets, decline and deterioration of financial performance, revenue does not sufficiently exceed costs, decline performance, deviation from goals, continuous performance lapses, inability of a business to meet its financial obligations, economic failure, venture failure, outcomes less than the expectations, poor management practices, overtrading, lack of additional resources, resource insufficiency, unbalance of the resources and opportunities in the organizational life stages, lack the necessary skills or versatility, entrepreneurs lack of strategic management knowledge, entrepreneur’s lack of vision, threat rigidity, strategic persistence, lack of will, lack of turnaround strategies and inability to respond effectively and make necessary adjustments to reverse the downward spiral of decline triggered by external factors. The literature recommend, failures can be mitigate through improving business management skill of the entrepreneurs, continuous concentration on cost reduction, quality improvements, service / product innovation; breakdown organizational barriers between departments; create close relationship with customers and suppliers, eliminating layers of management ,creating flatter organizational hierarchies, transform to advanced latest technology, global focus and enhancing human resource skills and obtain decisions based on the group discussions. The findings of the study useful in identifying practices to be avoided and in aiding educators, consultants, and SME business support agencies in meeting the needs of the business community
The Effect of Risk-Based Capital (Rbc), Net Premium Growth, and Claim Expenses (Claim Ratio) on the Financial Performance of the Life Insurance Companies in Sri Lanka
(Department of Finance, Faculty of Commerce and Management Studies University of Kelaniya Sri Lanka, 2024) Vijayantha, G.V. Malin; Fernando, P.N.D.
Introduction & Objectives: The insurance sector stands as a crucial component of Sri Lanka's non-banking financial sector, playing a significant role in bolstering the national economy. The financial stability and performance of Life Insurance Companies are of utmost importance, considering their primary function of risk management and providing protection against financial losses. Therefore, it is essential for these companies to identify the factors influencing their financial performance; and maintain a sound financial condition at any given time to meet their obligations to policyholders. This study seeks to examine the impact of Risk-Based Capital, Net Premium growth, and claim expenses on the financial performance of life insurance companies in Sri Lanka. Methodology: Data for analysis were sourced from quarterly publications of the Insurance Regulatory Commission of Sri Lanka (IRCSL) covering the period from the 1st quarter of 2016 to the 2nd quarter of 2022. The study focuses on the entire population of 16 IRCSL-approved life insurance companies in Sri Lanka, ensuring an identical sample and population. The analytical approach involves employing time series data regression techniques using EViews 12. The research findings are applicable not only to the Sri Lankan insurance sector but also offer insights for insurance companies operating in the wider Asian region. Findings & Conclusions: The study reveals that Risk-Based Capital (RBC), Net Premium growth, and Claim expenses significantly impact the financial performance of life insurance companies in Sri Lanka. Notably, Risk-Based Capital and Claim expenses negatively affect financial performance, as measured by Return on Assets (ROA). Conversely, Net Premium growth has a positive influence on the financial performance of life insurance companies, as proxied by ROA. These empirical results provide practical guidance for insurance companies looking to optimize their strategies in the Sri Lankan and broader Asian insurance markets. Finally, this research can be used as a basis for making a policy related decisions for the regulators, investors and customers on financial performance, Risk based Capital, net premium growth and claim expenses.
An Empirical Study on Day of the Week Effect; Evidence from Colombo Stock Exchange
(University of Kelaniya, 2006) Fernando, P.N.D.; Pathirawasam, C.
Seasonalities in security market returns have been extensively documented. Among the different seasonal effects observed in stock markets, an interesting one is the seasonality across days of the week. Fields (1991) observed that the US stock market consistently experienced significant negative and positive returns on Mondays and Fridays respectively. This matter was further tested in 1980’s (French, 1980; Gibbons and Hess 1981, Lakonishok and Levi 1982). The capital markets of many other countries also experience the similar seasonality (Jaffe and Westerfield 1985, peiro 1994, Agarwal and Tando 1994). This day of the week effect is a sharp contrast to the efficient market hypothesis. This study examines the day of the week effect in the Colombo Stock Exchange using the All Share Price Index (ASPI) and the Milanka Price Index (MPI). The study covers the period from 1985 to 2004. We compute the returns of the above market indexes as daily price relatives and log returns are taken for the study. To estimate day of the week effect in return, we use the ordinary least square (OLS) equation. In the equation index returns are taken as the dependent variable and five dummy variables are inserted as independent variables from Monday to Friday. We estimate the day of the week effect for the total sample period and revealed that there is no any significant day of the week effect in the total period. Then we analyzed the day of the week effect in five year sub samples and results are similar to the total sample period except in the last sub sample that is from 2000 to 2004. In the last sub sample there is a statistically significant Friday effect and for other days, returns are not significant.
Financial Stress of Small and Medium Scale Entrepreneurs: A Review
(International Conference on Business and Information (ICBI – 2019), [Doctoral Colloquium], Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2019) Jayasekara, B.E.A.; Fernando, P.N.D.; Ranjani, R.P.C.
Financial stress became contemporary issue in the globe, directly and indirectly affects the individual’s behavior and disorders their physical and mental health. The main objective of this study is to critically evaluate the literature on financial stress and to build a financial stress mitigating framework. The study identified different aspects and different measures of financial stress, level of financial stress of small and medium entrepreneurs, consequences of financial stress and methods of mitigating financial stress. The study finds out that the financial stress caused for depression, anxiety, poor academic performance, unscheduled absences from work and also negatively effect on health, self-esteem, marriage satisfaction, parenting role and family functioning. The financial stressed individuals have a tendency to write cheques with insufficient funds in the bank, regret marketing purchases, make minimum payments, more like to pay interest, less likely to save regularly. To overcome the financial stress, necessary to develop problem solving and financial management skills, develop effective handling of economic hardship, introduce more flexible repayment plans for the loans; improve positive financial behaviors and budgets. The financial stress is less with those who are employed, older, having a lower debt load percentage, and perceives better health and a better family relationship.
Growth and Value Investment Strategies in a War Affected Market: Evidence from Colombo Stock Exchange
(International Conference on Business and Information (ICBI – 2019), [Accounting, Finance and Economics], Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2019) Fernando, P.N.D.; Buddhika, H.J.R.
The objectives of this study are to investigate whether the value stocks outperform the growth stocks and to identify whether there is a structural break with the end of the twenty-year war prevailed in Sri Lanka. Finance literature, specifically related with value and growth agreement in developed capital markets, has concluded with contradictory results and the attention towards frontier markets such as Sri Lanka is poor. Current strategy incorporates Wilcoxon Rank Test and Chow Test for daily data for period from 2000 to 2018. The study found that the higher returns enjoyed by the investors who invested in growth portfolios in war period. In post-war period, the value portfolio returns outperform growth portfolio returns. Further, no structural break was detected during the period. The results revealed that the contribution of the value stocks were higher in post war period (2009-2018).
How successfully linkage programs can reach the poor in Sri Lanka:The case of Sarvodaya economic enterprise development services (GTE) Ltd - plan Sri Lanka - People's bank microfinance project at Polpitigama
(2008) Fernando, P.N.D.
Impact of Dividend Policy on Firm Value: With Special Reference to Banking Sector
(Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2021) Hettiarachchi, I.; Fernando, P.N.D.
Introduction: This research study the impact of dividend policy on firm value in Sri Lankan banking sector. Design/Methodology/Approach: The sample of the study consist of highest market capitalization ten banks listed in Colombo Stock Exchange and the data was collected over the period of 2016 to 2020 to determine the impact of dividend policy on firm value in Sri Lankan banking sector. Market value of bank represent the dependent variable of the study and yearly dividend payment of banks represent the independent variables of the study. Panel data regression model is used as is has cross section and time series nature of data. Findings: Based on the results of the analysis among selected variables for the study dividend policy has positive significant relationship with firm value and it derived dividend policy has significant impact on firm value in Sri Lankan banking sector. Conclusion: The finale results of the model derived dividend policy has significant impact on firm value in Sri Lankan banking sector. The findings of the study will guide decision makers of the banks, potential investors, academics and other stakeholders for making their strategic planning, profit allocation and making decisions on managerial implication of banking sector.
Implementation of an Online Results Issuing System in the Faculty of Commerce and Management Studies, University of Kelaniya
(International Postgraduate Research Conference 2019, Faculty of Graduate Studies, University of Kelaniya, Sri Lanka, 2019) Ranaweera, H.R.M.P.; Fernando, P.N.D.; Karunarathne, W.V.A.D.
The Faculty of Commerce and Management Studies of the University of Kelaniya, has implemented a Student Information System that is capable of handling complex administrative processes; from student registration to the issuing of final examination results. This will immensely benefit the students and the staff alike and will help streamline the processing of information. Currently student examination results are handled by a central location and marks are fed into the system by a single user in the Faculty Office. This is a time-consuming endeavor and tends to create a lot of inefficiencies and has limited data retrieval capabilities. This process not only delays the issuing of the results, but also has no traceability if needs arise for tracking for any errors or duplicity. Also, the current system possesses no method of retrieving data for research purposes and decision-making purposes for academics and administrators. This manual process causes prolonged turnaround time, unnecessary document transferring, inability to track delays, complications in data entry and report dispatch. A newer mechanism was required to address the issues faced. Efficient data retrieval for research purposes and decision making was also considered important. The objective was to design, develop and implement an online result issuing system that would benefit diverse parties: students, staff, administration and the environment. Data entry will be done by the examiners themselves, right after the marking of papers; ensuring data integrity in order to overcome unnecessary delays and errors. Further this will permit progress tracking for top management. The efficacy, transparency and ability to avoid human error and delays would support decision making by enabling the top management to analyze the time taken, quality and quantity of work done by the students as well as the examiners. Furthermore, the students would experience the convenience of accessing their results as soon as they have been issued whether they are present at the university or not. In addition to seeing the final grading for the relevant semester, they would be able to self-evaluate their academic performances based on the report they can view indicating their semester GPA through four years in a graph. Additionally, this online system would prove to be environmentally friendly with the reduction of paper printing. This web-based application was developed using open source scripting languages and databases: PHP, HTML 5, CSS, JavaScript, Ajax and MySQL. The system is hosted on the faculty premises and available 24/7 from anywhere. The system supports both windows and Mac operating systems via desktop and mobile devices and is accessible on IOS and Android devices, using any commonly used modern web browser with use of a log-in. This would mean the staff and student would no longer require a complex processes and lengthy timelines for the issuing of examination results
Internationalization of Sme’s, and Economic Downturn in Sri Lanka
(Department of Finance, Faculty of Commerce and Management Studies University of Kelaniya Sri Lanka, 2024) Silva, G.H.R.B.; Fernando, P.N.D.
Introduction & Objectives: Small and Medium-sized Enterprises (SMEs) play a crucial role in the global economy, making substantial contributions to employment, innovation, and overall economic growth. Recognizing SMEs as the backbone of the economy, the Government of Sri Lanka acknowledges their significance, constituting over 75% of the total number of enterprises, providing 45% of employment, and contributing to 52% of Gross Domestic Production. In today's globalized world, the internationalization of SMEs has emerged as a vital factor for economic growth and development. In present, firms Small and Medium Enterprises to remain competitive in the market, internationalization is important. However, various economic indicators, including gross national product, unemployment, interest rates, and exchange rates, have influenced this internationalization. Consequently, the recent economic downturn has also impact on internationalization of Small and Medium Enterprises in Sri Lanka. This study aims to investigate whether there is a significant impact of an economic downturn on the internationalization of SMEs in the country. Methodology: A quantitative research approach is adopted to measure phenomena based on numerical analysis methods. To address the research question, time series regression analysis is employed to determine the significance of the relationship between economic downturn and SME internationalization. Secondary data are collected through export development information to measure the depended variable of internationalization of small and medium enterprises, and other secondary data are collected to assess key economic indicators such as Gross Domestic Production fluctuations, Unemployment, Interest rate and Exchange Rate in Sri Lanka. The research sample take as consists of all the export-oriented SMEs in Sri Lanka for the study. Findings & Conclusions: Internationalization of Small and Medium Enterprises is significantly influence by Gross Domestic Production, Unemployment and Exchange Rate with the significance at 5% level. Interest Rate is not a significant factor in the Internationalization of Small and Medium Enterprises. Gross Domestic Production and Exchange Rate positively impact the Internationalization of SME and Unemployment negatively impact with the Internationalization of SMEs in Sri Lanka. Unstable GDP, changes in exchange rates, a shortage of skilled workers, and job migration are major factors affecting the measurable aspects of an economic downturn. Finally, this study findings more important to policy makers and business owners
Profitability of technical trading strategies in emerging Sri Lankan stock market
(University of Kelaniya, 2013) Fernando, P.N.D.
Stock Market Performance under Different Presidential Terms: Evidence from Sri Lanka
(Faculty of Commerce and Management Studies, University of Kelaniya, 2015) Piyananda, S.D.P.; Fernando, P.N.D.
Colombo Stock Exchange (CSE) plays a vital role in the growth of the key sectors of Sri Lankan economy. Even though there are several macro and firm specific factors effect on stock market performance, the main focus of this study is to examine the performance of CSE under different government leadership in Sri Lanka during the period from 1994 to 2014. This study mainly consider about the stock market indicators such as, All Share Price Index (ASPI), market turnover, market capitalization, turnover ratio, average market return etc. under different presidential terms. The sample period has divided in to four main presidential terms. Based on the indicators calculated to reflect the average market return, volatility and risk for each presidential term and based on the statistical analysis performed for each presidential term it was revealed that performance of stock market is superior under presidential term II (from 1999-2005).
Weak-form market efficiency of an emerging market: evidence from Colombo Stock Exchange (CSE)
(University of Kelaniya, 2008) Fernando, P.N.D.
Working Capital Management on Firms' Profitability: with special reference to manufacturing companies listed in Colombo Stock Exchange (CSE)
(University of Kelaniya, 2008) Fernando, J.M.R.; Fernando, P.N.D.
Short term financing (working capital management) is an important component of corporate finance because it directly affects both liquidity and profitability of the company. Raheman and Nasr, (2007) observed that there is a significant negative relationship between working capital (average collection period, inventory turnover in days, average payment period and cash conversion cycle) and profitability of the firms listed on Karachi Stock Exchange. Pedro Juan and Pedro Martinez (2004) found a significant relationship between SMEs' profitability and the numbers of days account receivables and days of inventory. Objective of this study is to identify the relationship between working capital management and company profitability of the manufacturing companies listed in the Colombo Stock Exchange ( CSE) in order to help Sri Lankan manufacturing companies to manage its working capital more efficiently. Secondary data relating to fifteen companies from 2001 to 2005 is considered for the analysis. Pearson's correlation analysis and regression analysis are used for the data analysis. Number of days accounts receivable, Number of days accounts payable, inventory turnover in days, and cash conversion cycle are the independent variables considered in this study. Sales growth rate, fixed assets to total assets also used as control variables. The results show that there is a strong negative relationship between variables of the working capital management (Number of days accounts receivable, Number of days accounts payable and inventory turnover in days) and profitability of the firm. It means that as the cash conversion cycle increases it will lead to decrease profitability of the firm. Further it revealed that there is a significant negative relationship between liquidity and profitability. These results will be beneficial for the managers to make their short term financing decisions more efficiently.