Browsing by Author "Liyanage, M. L. D. C. J."

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Exploratory Study on Utilization of AI Technology Public Commercial Banks in Sri Lanka
(Department of Finance, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka., 2025) Gunarathna, R. M. T. D.; Liyanage, M. L. D. C. J.
Introduction: This study explores the integration of AI in Sri Lanka's public banking sector, focusing on the opportunities, challenges, and strategic insights from senior professionals at People’s Bank and Bank of Ceylon. Examines how AI can improve operational efficiency, customer service, and security while identifying barriers to adoption and proposing strategies for successful implementation. Methodology: A qualitative methodology was used in this study, involving semi-structured interviews with banking professionals to gather insights on AI's role in transforming the banking sector. The data was analyzed through thematic analysis. Findings: The findings highlight that AI offers major opportunities for improving operational efficiency, such as through Robotic Process Automation (RPA), predictive analytics for customer behavior, and advanced security features like fraud detection. However, challenges such as limited budgets, a skills gap, inadequate technology infrastructure, and resistance to change from both employees and customers were also identified. The study stresses the importance of employee training, customer education, and strategic planning to ensure successful AI adoption. Conclusion: This research offers valuable insights into AI adoption in developing economies, particularly for public sector banks. It provides a strategic roadmap for gradual AI integration, balancing technological progress with workforce readiness. The study highlights the transformative potential of AI while recommending a phased approach to address implementation challenges.
Significance of Company-Specific & Macroeconomic Determinants on the Solvency of Sri Lankan Insurance Companies
(Department of Finance, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka., 2025) Samadhith, G. A. P.; Liyanage, M. L. D. C. J.
Introduction: This study investigates how company-specific variables including return on assets, leverage, investment yield, claims ratio, and retention ratio, as well as macroeconomic variables including GDP growth rate, inflation rate, and interest rate, affect the solvency of insurance companies. The study fills the empirical gap in Sri Lanka’s insurance industry by analyzing key determinants of life and general insurance companies’ solvency after introducing the Risk-Based Capital requirement in 2016. Methodology: The quantitative research methodology was used to analyze the key determinants of solvency by taking 12 life insurance and 10 general insurance companies operating from 2016 to 2023. Statistical methods including descriptive analysis, correlation analysis, and panel data regression analysis were used to assess the impact of selected independent variables on the solvency of insurance companies. Findings: The findings revealed that the return on assets, investment yield, and retention ratio have a significant positive influence on solvency, and the claims ratio has a significant negative influence on the solvency of both sectors, indicating the importance of operational efficiencies for greater financial stability. The GDP growth rate and the interest rate had a statistically insignificant impact on the solvency of both sectors, and the inflation rate was significant with a negative impact only on general insurance, which could be attributed to the economic volatility during the sample period analyzed. Conclusion: In conclusion, the study highlights the critical role of insurance companies’ operational efficiency and continuous monitoring of macroeconomic variables to sustain in the industry, with actionable recommendations to the regulators and insurers to maintain adequate solvency within the industry while protecting policyholders’ interests.
The Impact of Leverage on the Profitability of Commercial Banks in Sri Lanka
(Department of Finance, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka., 2025) Kaushalya, A. P. H.; Liyanage, M. L. D. C. J.
Introduction: This study investigates the impact of leverage on profitability in Sri Lanka's licensed commercial banks from 2020 to 2023 (using quarterly data), focusing on indicators such as Degree of Financial Leverage (DFL), Degree of Operating Leverage (DOL), Debt-to-Equity Ratio (DER), and Asset Growth. It aims to understand how excessive leverage, amidst fluctuating economic conditions, might affect both financial stability and profitability. Methodology: This quantitative study analyzes the impact of leverage on the profitability of 10 licensed commercial banks in Sri Lanka from 2020 to 2023 using secondary data from quarterly financial statements. Key leverage variables—Degree of Financial Leverage (DFL), Degree of Operating Leverage (DOL), Debt-to-Equity Ratio (DER), and Asset Growth—are assessed for their relationship with Return on Assets (ROA), which measures profitability. The study employs regression analysis to determine the influence of leverage on profitability, with correlation analysis examining the strength and direction of these relationships. Diagnostic testing ensures the reliability of the regression model by addressing potential issues like multicollinearity and heteroscedasticity. Findings: The overall regression model was found to be statistically insignificant with an R-squared value of 0.0349, indicating a poor fit. Among the independent variables, only DER showed a significant positive relationship with ROA, suggesting that higher debt relative to equity correlates with improved profitability. The other variables, DFL, DOL, and Assets Growth, were not significantly related to ROA. This implies that while DER can be a factor in enhancing profitability. Conclusion: The study concludes that traditional leverage measures, such as DFL and DOL, have no significant impact on bank profitability, while DER shows a marginally positive effect. Asset growth alone does not significantly enhance profitability. Therefore, banks should focus on optimizing their capital structure, improving operational efficiency, and managing assets strategically. Policymakers should promote sustainable leverage and better risk management. Researchers should explore other profitability determinants, and investors should prioritize banks with balanced leverage and effective asset management for sustainable growth.