Browsing by Author "Perera, L. A. S."

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A Comparative Analysis of the Impact of Firm- Specific and Macro Economic Factors Influence Capital Structure Decisions: Evidence from Sri Lankan Finance and Diversified Holdings Companies.
(Department of Finance, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka., 2025) Moulana, M. T. M. A. H.; Perera, L. A. S.
Introduction: This research describes the influence of Firm-Specific and Macro Economic Factors influence on Capital Structure Decisions of Sri Lankan Finance and Diversified Holdings Companies during the period of 2013 to 2023. Then understanding the knowledge gap then we can get the understanding of relative impact on these factors, the study concern to observing the financial strategies and regulatory policies. The research focuses on Firm-specific and Macro Economic Factors such as Profitability, Firm Size, Tangibility and Liquidity includes under Firm-specific Factors, the GDP, Interest Rate, Inflation Rate and Exchange rate includes under Macro Economic Factors. Methodology: The study applying a quantitative approach using panel data analysis. We were collected Financial Secondary data from the Colombo Stock Exchange website and the Macro Economic Factors data collected from the Central Bank of Sri Lanka website. We were used STATA software to run the data set, the Statistical techniques including descriptive analysis, Pearson’s correlation analysis and Regression analysis are were used to analyze and make interpret the connection between the variables. The hypothesis testing and robustness test to check the accuracy of the findings results. Findings: Based on the results the Profitability and Firm Size made a significant impact on Capital Structure across the sectors. The Finance Companies definitely depend on debt financing, it was impact by Liquidity and Asset Tangibility. The Diversified Holdings Companies explore more balanced approach between debt and equity, it was influenced by Macro Economic Factors such as GDP growth and Inflation. Finally, the key differences were understood in the relative importance of these determinants between the Finance and Diversified Holdings Sectors. Conclusion: The research explained the complex combination between Firm-Specific and Macro Economic Factors impact the Capital Structure. The finding delivers preferable insights for financial managers and policymakers in fluctuation economies like Sri Lanka. Furthermore, identifying sector-specific determinants, the research supports strategic decision-making for sustainable growth and Financial Stability.
A Comparative Analysis of the Impact of Firm-Specific and Macroeconomic Factors Influence Capital Structure Decisions: Evidence from Sri Lankan Manufacturing and Telecom Companies (2013-2023).
(Department of Finance, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka., 2025) Begum, M. H. S.; Perera, L. A. S.
Introduction: Optimal capital structure is important for the sound financial and future growth of any enterprise. This study aims to examine the significant impact of firm specific variables namely profitability, size, tangibility, liquidity and dividend payout policies in combination with macroeconomic variables consisting of; GDP growth rate, interest rate, inflation and exchange rate on the Manufacturing and Telecom firms of CSE for the year 2013-2023. Methodology: The analysis was carried out using panel data regression on a sample of 22 firms, 2 telecom firms and 20 manufacturing firms employing the criteria of market capitalization. All samples were chosen based on available ratios to accomplish the measurement of capital structure using the debt-to-equity ratio, and validity tests were applied to assess the accuracy of the calculations. In addition, the sectoral and combined examinations was conducted to look for difference and difference patterns. Findings: From the findings of the study show that this study finding of this manufacturing sectors represent firm specific characteristics, which show that tangibility and liquidity of the manufacturing firms have significant effects on capital structure decision and that firms with high tangible and high liquid assets utilize least debts. The level of profitability has a strong inverse relationship with leverage and strong positive relationship with dividend and interest rate that may be due to telecommunication infrastructure financing requirements. In the combined sector analysis, tangibility and liquidity are used as the major indexes, and the indexes of macroeconomic environment, including interest rate, exchange rate, inflation, and GDP growth had not been concluded to exert major influence over both sectors. It was also revealed that simply due to these observations, Firm size, Growth, GDP growth, Exchange rate and inflation rates held insignificant impacts across both sectors. Conclusion: This study has shown that firm specific characteristics organizational liquidity tangibility, Dividend and Profitability significantly affect capital structure decisions in the Manufacturing and Telecom industry of Sri Lanka aside from influence by the macroeconomic indicators namely the interest rates. The overall model also shows significance at the 1% level for both the telecom and the manufacturing sectors. These insights vindicate the essentiality of industry-specific financing to give firms the ability to improve their solvency and performance.
A Comparative Analysis of the Impact of Firm-Specific and Macroeconomic Factors on Capital Structure Decisions: Evidence from Sri Lankan Automobile and Consumer Goods Companies
(Department of Finance, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka., 2025) Kenusha, T.; Perera, L. A. S.
Introduction: Capital structure decisions are fundamental to a firm's financial management, influencing its ability to optimize resources and mitigate risks. This study evaluates the impact of firm-specific factors - profitability, firm size, tangibility, liquidity, and dividend payout and macroeconomic factors, including GDP growth, interest rates, inflation, and exchange rates, on the capital structure of automobile and consumer goods companies listed on the Colombo Stock Exchange (CSE) between 2013 and 2023. Methodology: The analysis used panel data regression on a sample of 30 companies, consisting of five automobile firms and 25 consumer goods firms, selected based on market capitalization. The debt-to-equity ratio was utilized to measure capital structure, and rigorous diagnostic tests ensured the reliability of the results. Sectoral and combined analyses were conducted to identify distinct patterns and variations. Findings: The results indicate that firm-specific factors such as firm size and tangibility are significant in shaping capital structure decisions. Firm size positively influences capital structure in the automobile sector, while tangibility shows a marginally significant positive effect across sectors. Liquidity has a significant negative impact on capital structure in the consumer goods sector and across the combined sample. Among macroeconomic factors, interest rates exhibit a significant negative influence on capital structure in the consumer goods sector and combined analysis, while exchange rates show mixed effects, negatively impacting the automobile sector but positively influencing the consumer goods and combined sectors. Notably, profitability, dividend payout, GDP growth, and inflation rates were found to have no significant effect across all sectors. Conclusion: The study's findings reveal that firm-specific factors, particularly firm size and tangibility, and macroeconomic factors such as interest rates and exchange rates significantly influence capital structure decisions in Sri Lanka's automobile and consumer goods sectors. The overall model demonstrates statistical significance at the 1% level across both sectors. These insights highlight the critical importance of tailored financing strategies for different industries, enabling firms to enhance their financial stability and performance.
A Comparative Analysis of the Impact of Firm-Specific and Macroeconomic Factors on Capital Structure Decisions: Evidence from Sri Lankan Retail and Utility Sector.
(Department of Finance, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka., 2025) Kajanika, P.; Perera, L. A. S.
Introduction: This study investigates the influence of firm-specific factors, such as profitability, firm size, asset tangibility, liquidity, and dividends, and macroeconomic factors, including GDP growth, inflation, interest rates, and exchange rates, on capital structure decisions within Sri Lankan utilities and retail companies. Spanning the period from 2013 to 2023, this research compares the distinct financial dynamics of these two sectors to provide insights into their capital structure choices and the factors influencing these decisions. Methodology: A quantitative approach was employed using secondary data from 21 companies—15 in the retail sector and 6 in the utilities sector—listed on the Colombo Stock Exchange (CSE). Capital structure was measured through leverage ratios, while profitability, size, tangibility, and macroeconomic indicators were analyzed. Panel data regression techniques were applied to assess the relationships between the independent variables and capital structure. Sectoral comparisons provided further insight into variations. Findings: The findings indicate significant differences between sectors. In the utility sector, higher tangibility of assets strongly correlates with increased debt usage, reflecting the capital-intensive nature of this industry. Conversely, retail firms exhibited a higher reliance on equity, likely driven by their need for financial flexibility amidst competitive market dynamics. Macroeconomic factors such as GDP growth and inflation had varying impacts, with inflation negatively affecting retail firms but offering a mild hedging benefit to utility firms. Interest rates showed a uniformly negative influence on debt usage across both sectors. Conclusion: This study highlights the critical role of both firm-specific and macroeconomic factors in shaping the capital structure decisions of Sri Lankan utilities and retail companies. Utilities, with their stable cash flows, favor debt, whereas retail firms prioritize flexibility due to market volatility. Policymakers and corporate managers can use these findings to tailor strategies for optimizing capital structures, mitigating risks, and enhancing financial resilience in their respective industries. The study concludes that firm-specific factors such as tangibility, firm size, and liquidity, along with the macroeconomic factor of interest rates, are the most influential determinants of capital structure. Utilities Sector: Tangibility and firm size are key drivers, reflecting the sector's reliance on debt financing for infrastructure development. Retail Sector: Liquidity and profitability are critical, underscoring the need for financial flexibility in a competitive market. Macroeconomic factors, especially interest rates and inflation, further shape these decisions by altering the cost and attractiveness of debt. Firms and policymakers should consider these findings to optimize capital structure strategies, enhance resilience to economic fluctuations, and support sustainable growth in their respective industries.
Challenges and benefits of implementation of ISO 9001: 2015: The case of Department of Finance, University of Kelaniya, Sri Lanka
(Faculty of Graduate Studies, University of Kelaniya Sri Lanka, 2022) Chathurika, H. L. D. J.; Abeysekera, R.; Perera, L. A. S.; Premarathne, W. G. I. D.; Chathurika, H. L. D. J.
Today, higher educational institutions are developing at a rapid pace by adopting new processes and technology. Further, they are subject to intense competition. Given this backdrop, higher educational institutions, in particular universities, are concerned about quality assurance. University Grant Commission, through Quality Assurance Council, gives the direction to maintain quality in Sri Lankan Universities. There has been a growing interest in adopting internationally reputed ISO 9001: 2015 by state universities in Sri Lanka that complement other quality measures. The Department of Finance (Dfin), University of Kelaniya, implemented ISO 9001: 2015 successfully recently. The objective of this study is to examine the challenges and benefits of the implementation of ISO by Dfin. A qualitative research approach using a single case study method was adapted to carry out the study. The findings of this study show that DFin implemented the ISO to gain a competitive advantage and reputation, and to establish a proper filing system. The study also reveals that lack of resources, resistance to change, and the existence of other quality measures challenged the implementation of ISO. The findings of this study contribute to knowledge and practice domains.
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.
Effect Of Financial Risks on Financial Stability of Licensed Commercial Banks in Sri Lanka
(Department of Finance, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka., 2025) Arangalla, A. G. S. N.; Perera, L. A. S.
Introduction: This study examines the effect of financial risks including credit, market, operational, and liquidity risks on the financial stability of licensed commercial banks in Sri Lanka. Financial stability is pivotal for Sri Lanka’s economic resilience, especially in the face of challenging economic conditions. However, financial risks pose considerable challenges to banks’ financial stability. This study seeks to explore an identified empirical gap by examining the impact of these financial risks on the long-term sustainability of banks in Sri Lanka. Methodology: The study follows a quantitative approach, analyzing secondary data collected from 13 domestic licensed commercial banks in Sri Lanka over 10 years (2014–2023). Credit risk, market risk, operational risk, and liquidity risk are the independent variables used in this study, and the dependent variable is financial stability. Bank size is also included as a control variable for this study. This research employs panel data regression with random effects and diagnostic tests for the analysis. Findings: The findings reveal that credit risk and operational risk have a significant effect on financial stability, while market risk is only significant with financial stability under interest rate risk. Liquidity risk does not have a significant effect on financial stability in Sri Lankan banks. Conclusion: The study concludes that credit risk and operational risk are key determinants of financial stability in Sri Lankan banks. Even risk factors deemed insignificant in the current context should be monitored, as they have the potential to become impactful in the future. The study underscores that risk management strategies are vital to maintaining banks’ stability and fostering sustainable economic growth. Future research may consider analyzing the impact of other types of risks on banks’ financial stability.
Exploring the Impact of Financial Literacy, Smart BNPL Solutions and Financial Well - Being on Consumer Buying Behavior in Kalutara District, Sri Lanka
(Department of Finance, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka., 2025) Weerakoon, W. M. G. H. M.; Perera, L. A. S.
Introduction: The rapid advancement of technology has revolutionized the financial services industry, giving rise to innovative solutions such as Buy Now Pay Later (BNPL) services. However, the effective utilization of these services is contingent upon consumers' financial literacy and overall financial well-being. This research delves into the interplay between these factors, exploring how they influence consumer buying behavior in the context of Sri Lanka. Methodology: A quantitative research methodology was employed, utilizing structured questionnaires to collect data from a sample of [number] respondents residing in the Kalutara District. Key variables such as fintech literacy, BNPL usage, financial well-being, and consumer buying behavior were measured using validated scales. Statistical techniques, including correlation and regression analysis, were utilized to analyze the data and test the formulated hypotheses. Findings and Discussion: The findings reveal significant positive relationships between fintech literacy, BNPL usage, and financial well-being, and their subsequent impact on consumer buying behavior. Individuals with higher levels of financial literacy were found to be more likely to use BNPL services responsibly, such as paying on time and using them for planned purchases. Conversely, lower financial literacy was associated with impulsive buying behavior and potential financial difficulties. Additionally, higher financial well-being was linked to more prudent financial decisions and a reduced likelihood of financial difficulties associated with BNPL usage. Conclusion: The study underscores the importance of financial education initiatives to enhance fintech literacy and promote responsible use of BNPL services. By fostering a more financially literate population, policymakers, financial institutions, and educators can empower consumers to make informed financial decisions and mitigate the potential risks associated with digital financial innovations.
Exploring the Impact of Fintech Literacy, Smart BNPL Solutions (Koko App and Credit Cards), and Financial Wellbeing on Consumer Buying Behavior in the Colombo District, Sri Lanka
(Department of Finance, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka., 2025) Wanigasuriya, W. D. H. D.; Perera, L. A. S.
Introduction: This study investigates the impact of Fintech literacy, smart BNPL solutions (Koko App and credit cards), and financial wellbeing on consumer buying behavior in the Colombo district, Sri Lanka. This research highlights how these variables impact consumer behavior. Methodology: The research employs a quantitative methodology, using structured questionnaires to collect data from 419 respondents within the Colombo district. Key variables—Fintech literacy, smart BNPL solutions (Koko App and credit cards), financial wellbeing, and consumer buying behavior—were measured using validated scales. Statistical techniques, including correlation and regression analyses, were applied to evaluate the impact of the independent variables on dependent variables and test the proposed hypotheses. Findings: The study reveals significant positive impact of independent variables on consumer buying behavior. Smart BNPL solutions (Koko App and credit cards), Fintech literacy, and financial wellbeing are positively impacting consumer buying behavior, demonstrating that increased financial knowledge and stability promote responsible financial decisions. Conclusion: This research underscores the pivotal role of Fintech literacy, BNPL adoption, and financial wellbeing in shaping consumer purchasing decisions. The findings provide actionable insights for policymakers, financial institutions, and educators to enhance the adoption and effectiveness of technology-driven financial solutions. Future studies could explore demographic influences, longitudinal trends, and psychological factors to build a more comprehensive understanding of consumer buying behavior in the digital financial landscape.
Exploring the Impact of Fintech Literacy, Smart BNPL Solutions and Financial Wellbeing on Consumer Buying Behavior in the Gampaha District, Sri Lanka
(Department of Finance, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka., 2025) Silva, A. S. N.; Perera, L. A. S.
Introduction: The rapid expansion of financial technology (Fintech) has transformed consumer financial behaviors globally, with the rise of Buy-Now-Pay-Later (BNPL) solutions like Koko playing a pivotal role. This study examines the influence of Fintech literacy, smart BNPL solutions, and financial well-being on consumer buying behavior in the Gampaha District of Sri Lanka. Methodology: Adopting a quantitative approach, the study surveyed 386 consumers using a structured questionnaire. The sample was drawn using stratified random sampling to ensure diversity across demographics. Independent variables analyzed included Fintech literacy, BNPL solutions, and financial well-being, while consumer buying behavior served as the dependent variable. Data analysis employed SPSS 23.0, utilizing descriptive statistics, correlation, regression, and factor analyses to derive insights. Findings: The results reveal that Fintech literacy, BNPL solutions, and financial well-being significantly influence consumer buying behavior, with financial well-being emerging as the strongest predictor. Smart BNPL solutions showed a robust correlation with buying behavior, emphasizing their role in reshaping purchasing dynamics. Reliability and validity tests confirmed the consistency of constructs, and multicollinearity tests indicated distinct contributions of each variable to the regression model. Conclusion: The findings underscore the importance of promoting Fintech literacy and enhancing financial well-being to encourage responsible consumer behavior. Policymakers and financial service providers should consider these insights to design educational programs and flexible financial products that align with consumer needs in evolving economic landscapes.
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 area
Impact of Bank-Specific Determinants on Capital Adequacy Evidence from Licensed Banks in Sri Lanka
(Department of Finance, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka., 2025) Rashani Sanjana, H. M.; Perera, L. A. S.
Introduction: Capital adequacy assesses a bank’s ability to absorb losses and meet its obligations. Capital adequacy can be expressed as banks’ capital to its risk-weighted assets. Basel Committee on Banks Supervision has imposed the minimum capital adequacy ratio to ensure that banks operate safely. Also, a higher capital adequacy ratio implies that a bank has adequate capital to meet its obligations and unexpected losses. Therefore, increasing the customers' and investors’ confidence. The capital adequacy ratio indicates the financial health of a bank. Methodology: Bank-specific variables such as return on asset ratio (ROA), return on equity ratio (ROE), non-performing loan ratio (NPL), deposit to asset ratio (DR), loan to deposit ratio (LTD), total equity to total liability (EQL), and net interest margin ratio (NIM) on capital adequacy ratio of licensed banks (licensed commercial banks and licensed specialized banks) in Sri Lanka considered independent variables. And capital adequacy ratio is considered a dependent variable. A quantitative research approach was used to conduct this research. As a sample, this research used 6 licensed specialized banks and 10 licensed commercial banks. This study used 13 years (2011–2023) of secondary data to investigate the relationship between capital adequacy ratio and bank-specific variables. A linear regression model was used to analyze the relationship between the capital adequacy ratio and bank-specific variables of licensed banks in Sri Lanka. Further panel data analysis with a random effect model. Findings: The findings show that the return on asset ratio and non-performing loan ratio have a positive and significant impact on the capital adequacy ratio of licensed banks in Sri Lanka. And return on equity ratio has a negative and significant impact on the capital adequacy ratio of licensed banks in Sri Lanka. However, net interest margin, total equity to total liability, deposit-to-asset ratio, and loan-to-deposit ratio haven’t significant impact on the capital adequacy ratio of licensed banks in Sri Lanka. ROA, ROE, and NPL ratios are important determinants of the capital adequacy ratio. So banks need to give much attention to these variables. Conclusion: In conclusion, this study aimed to investigate the relationship between the capital adequacy ratio (CAR) and key bank-specific variables for licensed commercial and specialized banks in Sri Lanka. According to the findings, the return on asset ratio, return on equity ratio, and non-performing loan ratio have a significant impact on the capital adequacy ratio. Therefore, must prioritize improving asset returns (ROA) and effectively managing non-performing loans. Additionally, attention to the return on equity (ROE) is necessary to avoid reducing capital buffers. And findings contribute to the bank managers of both licensed commercial and specialized banks, policymakers, regulators, investors, and customers.
Impact of Climate Finance on Debt Sustainability: An Analysis of Green Climate Finance and Debt-for-Climate Mechanisms in Sri Lanka
(Department of Finance, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka., 2025) Razana, J. F.; Perera, L. A. S.
Introduction: Unsustainable national debt and growing climate change vulnerability are Sri Lanka's two main problems. This paper explores how climate finance tools like debt-for-climate swaps and green bonds might reduce the nation's debt load while boosting climate resilience. A substantial empirical evidence vacuum about the quantitative effect of climate funding on debt sustainability is filled by the study. Methodology: The study used secondary data from 2015–2023 that was obtained from organizations such as the Central Bank of Sri Lanka, the IMF, and the Green Climate Fund. It did this by using a positivist research philosophy and a deductive technique. The association between debt-to-GDP ratios and climate finance inflows was assessed using statistical techniques such as regression and correlation analysis. Findings: The results showed that while climate financing systems have theoretical potential, there is currently little evidence of their actual influence on debt sustainability. Negligible regression results and weak correlations imply that present inflows are not enough to considerably lower Sri Lanka's burden of debt. The primary barriers were found to be ineffective resource allocation, institutional imperfections and a lack of conformity with national fiscal policy. The study highlights the possibility of expanding these mechanisms and incorporating them into all-encompassing debt management plans despite these barriers. Conclusion: According to the study's findings, climate finance can help address Sri Lanka's environmental and economic problems, but its efficacy is dependent on improved policy coordination, larger funding scales, and strengthened institutional ability. Among the suggestions are improving governance structures, encouraging private sector involvement, and coordinating climate finance instruments with more comprehensive fiscal plans.
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.
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.
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.
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 liability
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.
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.
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.