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

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Covid-19 Pandemic and Industry Group Performance of the Colombo Stock Exchange
(Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2021) Ramanayake, D.C.; Perera, L.A.S.
Introduction: This research study examines the impact of the lockdown announcement imposed by the government on the different leading industry groups of the CSE such as Health Care Equipment and Services, Banks, Energy, Capital Goods, Transportation, etc. Design/Methodology/Approach: Event study methodology has been employed to analyze the data. Lockdown declaration day has been considered as the event date for this study. I have taken a 40-trading day event window, i.e., 20 trading days before and 20 trading days after the date of the announcement. Secondary data is used in the study and the same is collected from the CSE data library. Using MS-Excel, three models have applied for analysis—mean-adjusted, market-adjusted, and risk-adjusted abnormal return. Findings: In the initial lockdown analysis, on the date of announcement, all the industries show negative abnormal returns under the mean adjusted abnormal return model. Three industry groups (Energy, consumer services and insurance) show positive impressive abnormal return at a significant level under the market adjusted abnormal return model. Conclusion: Most of the sectors performed positively and gained abnormal returns after the announcement of lockdown. It showed that these sectors steeply recovery after falling down the market index. That is indicate that investors were confident that the impact was occur due to the abnormal situation of the market and not due to the fault or issue of these industries. Based on the findings, investors may decide to hold their investments in the stock market that has recovered during the period. This is the first study to analyze the impact of the announcement of lockdown due to Covid-19 on the industry group performance using the event study method in the context Colombo Stock Exchange.
Credit risk management and shareholder value creation: with special reference to listed commercial banks in Sri Lanka
(University of Kelaniya, 2016) Perera, L.A.S.; Morawakage, P.S.
The main aim of this study is to investigate the effect of credit risk management on the shareholder value in listed commercial banks in Sri Lanka. The research has used only the secondary data for the purpose of analysis and the sources of data include the annual reports of selected quoted public banks. This study employed return on shares to measure the shareholder value while non-performing ratio, Capital adequacy ratio and Loans to deposits ratio have been used as the indicators of the credit risk management of the banks. Regression models were employed to do the empirical analysis and focuses on the descriptions of the output obtained from the SPSS. The findings reveal that credit risk management has a significant effect on shareholder value in all eight banks. Among the three credit risk management indicators, NPLR has the most significant effect on the return on shares. Through the results of the study it can be concluded that null hypothesis can be rejected since there is a significant relationship between credit risk management and shareholder value.
Credit Risk Management and Shareholder Value Creation: With Special Reference to Listed Commercial Banks in Sri Lanka
(Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2016) Perera, L.A.S.; Morawakage, P.S.
The main aim of this study is to investigate the effect of credit risk management on the shareholder value in listed commercial banks in Sri Lanka. The research has used only the secondary data for the purpose of the analysis and the sources of data include the annual reports of selected quoted public banks in Sri Lanka. This study employed return on shares to measure the shareholder value while non-performing ratio, capital adequacy ratio and loans to deposits ratio have been used as the indicators of the credit risk management of the banks. Regression models were employed to do the empirical analysis. Further the output obtained from the SPSS package was used to interpret the findings. The findings reveal that credit risk management has a significant effect on shareholder value in all eight banks. Among the three credit risk management indicators, Non-Performing Loan Ratio (NPLR) has the most significant effect on the return on shares. Through the results of the study, it can be concluded that null hypothesis can be rejected since there is a significant relationship between credit risk management and shareholder value.
Determinants of Financial Literacy with Special Reference to Young Adults in Western Province of Sri Lanka
(Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2022) Malavithanthila, M.K.T.N.; Perera, L.A.S.
Purpose: The aim of this study is to investigate and evaluate the factors affecting financial literacy among the young adults of western province of Sri Lanka. The fact that this study expands on the idea of financial literacy and its factors is one of its strengths. Design/methodology/approach: The research has a quantitative survey-based data collection, and it also uses both structural equation modeling (SEM) and Regression analysis. The population of the study is the young adults that is young adults whose age is between 17 to 30 in Western province of Sri Lanka. The sampling method of the study is convenience sampling, and the sample size was determined using Cochran’s formula which is 384.91. Findings: The results of the study showed that the young adults are more confident with financial literacy, financial behavior, financial knowledge, and financial experience whereas they should concentrate more on improving their financial goals, financial decisions and financial wellbeing. With the help of the regression models, it also proved that financial Technology is a new determinant of financial literacy and the model built showed the interrelationship between the financial literacy determinants. Originality: This study fills a gap in the body of knowledge about the several variables that affect financial literacy. It offers data to aid decision-makers in creating plans to improve societal financial literacy.
Determinants of Financial Performance During Covid 19 Pandemic: Evidence from Colombo Stock Exchange
(Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2022) Eshan, W.M.T.; Perera, L.A.S.
Purpose: Financial information is crucial for improving Sri Lanka's economy and delivering critical services to its citizens. The purpose of this study was to identify factors influencing financial performance with special reference to top companies in CSE in 20 sectors in Sri Lanka before and during the COVID-19 period. The study's importance lies in its ability to pinpoint the variables influencing the financial performance of Sri Lanka's top CSE firms across 20 industries. Design/Methodology/Approach: The target population of the study was 295 CSE companies Sri Lanka. The sample size in this study was top 50 companies in CSE in 20 industries. Data was obtained from audited financial reports. Data were analyzed using both descriptive, correlation and regression analyses. Statistical Software for Data Science (Stata) software was used as a tool for data analysis. The dependent variable is a firm’s performance measure ROA, the independent variables include Firm Size (FS), Asset Utilization (AU), Leverage (LEV), Liquidity (LIQ), Capital Structure (CS) and Operating Expenses (OPEX). Findings: The finding shows that leverage and capital structure have significantly impact on financial performance in top companies in CSE in 20 sectors and Liquidity, assets utilization, capital structure and operating expenses are not significantly impact on firm’s performance of companies in CSE in 20 sectors in Sri Lanka in before and during the COVID-19 period. Originality: This study has identified the determinants of financial performance During Covid 19 Pandemic for entire 20 sectors in the CSE.
The Determinants of Life and General Insurance Demand in Sri Lanka
(Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2021) Abesekara, M.S.; Perera, L.A.S.
Introduction: The main purpose of this study is to identify how macroeconomic, demographic and socioeconomic factors affect the life and general insurance demand in Sri Lanka and the most significant factors affecting life and general insurance demand in Sri Lanka. Design/Methodology/Approach: Income, education, inflation, urbanization, and finance sector development are used as independent variables and life and general insurance density are the dependent variables of this study. This research uses secondary data, and the sample of this study is the years 2000 to 2019. These data are collected from different sources. analyzing method of this study is multiple regression analysis Findings: income, urbanization has a significant effect on life insurance demand in Sri Lanka. Income, urbanization and finance sector development have a significant effect on the general insurance demand in Sri Lanka. Education, inflation are insignificant for both life and general insurance demand in Sri Lanka. Conclusion: Income level and urbanization have a significant effect on both life and general insurance demand in Sri Lanka. So, increasing income levels and urbanization will be helpful for increase the insurance demand of the country. Also, insurance companies can focus on high-income people and people who live in urban areas to increase their insurance product sales. Developing the finance sector of the country will help develop the general insurance industry of the country.
The Environmental Disclosure Practices and Firm Performance: Evidence from Manufacturing Sector in Sri Lanka
(Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2021) Lakshani, E.A.A.; Perera, L.A.S.
Introduction: This research study aims to identify how the environmental disclosure practices influence the firm performance with the moderating effect of environmental performance. Design/Methodology/Approach: The Sample of the study consist with of 15 listed companies in manufacturing industry in Sri Lanka which will mainly focus on the financial years of 2014 to 2020. Also, it is expected to collect data relating to environmental disclosure with the help of an environmental disclosure index developed by Clarkson et al. (2008) and the data will be collected from the annual reports and the sustainability reports of the companies in the sample. Using the correlation and regression analysis it has been tested whether there is a direct relationship between the environmental disclosure and the firm’s financial performance through this research study. Further, it has also been performed an interaction effect of regression analysis to study the moderating effect of environmental performance on the direct relationship between environmental disclosure and firm market value. Findings: As per the findings of this study it was revealed that there is an insignificant positive relationship between environmental disclosure and ROE as well as an insignificant negative relationship between environmental disclosure and ROS. Therefore, it can be concluded that there is no systematic relationship between environmental disclosure and firm performance. Moreover, no significant moderating effect of environmental performance was identified from this research study. Conclusion: The results indicated that there was no systematic relationship between the environmental disclosure and firm performance since the correlation is not significant. As an additional analysis, a panel regression was run, and it also indicated a positive relationship between environmental disclosure with respect to the ROE and ROS.
Factors Affecting the Behavior of Investors: Empirical Study Based on Colombo Stock Exchange
(Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2016) Fernando, C.S.P.K.; Weerasinghe, W.D.J.D.; Perera, L.A.S.; Weerarathne, D.I.
The primary motivation of this research is to examine the investment selection factors which the investors expected to consider as important in an investment decisions and to rank the factors accordingly based on Colombo Stock Exchange (CSE), and to find out whether the investors consider the same pattern of investment selection factors in making the real investment decision. Data for the study were collected from 50 individual retail investors in the Gampaha district through a questionnaire by using convenience sampling. To analyze the data the researchers have used frequency table and descriptive analysis technique. It was found that, investment selection factors that investors expect to consider, the most important in making an investment decision are; past performance of the stock, Stock brokers’ advice, Company reputation, Company earnings and for quick selling purposes. Further, in making the real investment decision, the highest frequency of the investment selection factors considered are; past performance of the stock, Stock brokers’ advice, advice from others, for quick selling purposes and to get benefits. Sri Lankan investors seem to be under confident, uncertain and are very sensitive to others’ reactions and opinions. The most common determinants that have a significant impact on the investors’ behavior are past performance of the stock, Stock brokers’ advice, advice from others and for quick selling purposes.
Financial Inclusion and Income Inequality: Evidence from South Asian Countries
(Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2022) Kaushalya, M.L.M.; Perera, L.A.S.
Purpose: This study investigates the impact of financial inclusion on income inequality for five south Asian countries such as Sri Lanka, India, Bangladesh, Pakistan and Maldives over the 2007 to 2021. Design/Methodology/Approach: All the data collected as a secondary data and Data for all variables will be collected from the World Bank database, World Governance Indicators, International Labor Organization, the International Monetary Fund, and some national reports from 2007 and 2021. The variables underwent multiple regression model analysis to identify the predictability of the explanatory variables on GINI index. Findings: The research found that there is a positive significant impact of financial inclusion on income inequality in south Asian countries. As well as there is a positive significant impact of the number of commercial bank branches per 100,000 adults, school enrollment, government effectiveness and unemployment on income inequality. There is a negative significant impact of Number of ATMs per 100,000 adults on income inequality. Originality: The results showed that except for SE and GE, the remaining variables of BRANCHES, ATM and unemployment had a significant impact on income inequality. The overall result showed the positive significant impact of financial inclusion on income inequality.
Financial Stability and Economic Growth: Evidence from South Asian Region
(Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2021) Rajapaksha, R.S.D.S.D.; Perera, L.A.S.
Introduction: This study investigates the impact of financial stability on economic growth in south Asian region. For this purpose, researcher had employed panel data analysis for the period of 2010 to 2020 and for 6 south Asian countries. Design/Methodology: To measure the impact on economic growth study used Gross Domestic product as the dependent variable and Ratio of regulatory capital to risk-weighted assets, Ratio of non-performing loans to gross loans, Ratio of liquid assets to total assets and Ratio of return on assets used as independent variables. Financial depth, Consumer Price Index, Population and Trade openness used as control variables. Researcher used fixed effect model for analysis data. Findings: The study revealed there is no significant impact between the Ratio of regulatory capital to risk-weighted assets, Ratio of non-performing loans to gross loans, Ratio of liquid assets to total assets on GDP. Ratio of return on assets has negative impact on GDP. Population and Trade openness have positive significant relationship to the Gross Domestic product. Consumer price index shows insignificant impact to the Gross Domestic Product. Financial depth shows significant negative relationship to the gross domestic product. Conclusion: This study concludes there is no significant impact from financial stability on economic growth in south Asian countries.
Impact of Economic shocks on the Sri Lankan Agriculture sector Output and Employability
(Department of Finance, Faculty of Commerce and Management Studies University of Kelaniya Sri Lanka, 2024) Pabasara, M.L.R.; Perera, L.A.S.
Introduction - This study investigates how economic shocks affect Sri Lanka's service industry, which is a crucial part of the country's growing economy. The study concentrated on important service sectors, including real estate and ownership dwelling, financial services, insurance, trade and retail trade, transportation, storage, and communication. The study aims to understand how macroeconomic variables in the service sector, such as employment and output, are affected by economic shocks, such as changes in interest rates, exchange rates, and inflation. Methodology – This study utilizes secondary data obtained from various sources. Using a time series data set, the study examined the variables such as inflation rates, exchange rates, and fertilizer imports against output and employability. The collected data is analyzed using descriptive statistics, correlation analysis, and regression analysis. Findings & Conclusion – This study provides the influence of economic shocks on macroeconomic variables in the agriculture sector. wherein the inflation rate, exchange rate and fertilizer imports affect output but not the agriculture sector's employability. There are studies that support the findings exhibited in this study based on historical studies. Despite many limitations, this study will provide insightful information highlighting the significance of interest rate stabilization, moderate inflation, and exchange rate stability for long-term growth in the agriculture sector. Additionally, this study closes a significant knowledge gap that is unique to the Sri Lankan agriculture sector and offers a basis for well-informed decision-making in the face of economic uncertainties.
Impact of Export Diversification on Economic Growth: Evidence from Developing Countries of Asian Region
(Faculty of Commerce and Management Studies, University of Kelaniya, 2021) De Silva, M.R.V.; Perera, L.A.S.; Hewage, J.K.
Export-led growth strategy has become a major concern of economic policymakers of developing countries to achieve their economic growth objectives. In this respect, the effect of export diversification has a major role to play in achieving higher and sustainable economic growth. The main focus of this study is to understand the impact of export diversification on the economic growth in developing countries of the Asian region and to identify the most suitable export strategy 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 the GMM panel estimation method to analyze the data of 33 developing countries in the Asian region from 1995 to 2019 at an annual frequency. The study has found a negative and significant relationship between the export herfindahl concentration index (H) and the GDPPC growth of the selected developing countries, which implies that there is a positive impact of export diversification on economic growth. In light of the findings it can conclude that export diversification may lead to higher and sustainable economic growth in developing countries of the Asian region.
The Impact of Extended Service Quality Dimensions on Customer Satisfaction in the Life Insurance Industry in Western Province, Sri Lanka
(Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2022) Wijeruwan, M.P.N.K.; Perera, L.A.S.
Purpose: In insurance industry service quality is a crucial factor because the services offer by the company are not visible, the quality of the Service is intangible, and it is difficult to assess quality of the service at the point of purchasing the service. Hence the objective of this study is to examine the impact of service quality dimensions on customer satisfaction in life insurance industry in Sri Lanka. Design/ Methodology/ Approach: The study empirically evaluated five service quality dimensions; Reliability, Responsiveness, Tangibility, Assurance, Technology and Corporate Image and their impact on life insurance customer satisfaction. The service quality measured by SERVQUAL model. Technology and Corporate Image are the newly introduced service quality dimensions to the insurance industry in Sri Lanka. The sample consisted of 277 life insurance customers in Western Province and primary data were gathered through a structured questionnaire among the respondents. Findings: The results demonstrated that there is a significant impact from Reliability, Assurance, Responsiveness, Technology and Corporate Image to the customer satisfaction. But Tangibility has an insignificant impact to the customer satisfaction in Insurance industry. Originality: This study concluded that Technology, Corporate Image, and Responsiveness are the key factors that influence mostly on customer satisfaction in life insurance industry in Sri Lanka. In the light of the results, extended service quality dimensions have an impact of customer satisfaction in Life Insurance Industry in Sri Lanka.
Impact of Financial Distress on Firms’ Performance: Evidence from CSE Food Beverage & Tobacco Industry and Consumer Durable & Apparel Industry
(Department of Finance, Faculty of Commerce and Management Studies University of Kelaniya Sri Lanka, 2024) Lakshani, P.S.K.; Perera, L.A.S.
Introduction - Financial distress arises when a corporation cannot meet payment obligations or when cash flow projections indicate that the company will soon be unable to meet its obligations. The Sri Lankan food, beverage, and apparel sectors play significant roles and contribute immensely to the country's GDP. This research aims to determine the significant effect of financial distress on companies listed in the consumer goods industry, food and beverages sector, and apparel sector in Sri Lanka. Methodology - Data was gathered from annual reports of 20 listed firms of two sectors on CSE from 2012 to 2021. Return on assets was used as the dependent variable, and Altman's Z-score was used as an independent variable to measure financial distress. Liquidity, leverage and net profit margin were used as the control variables. Data were analysed using SPSS, which included statistical tests such as descriptive statistics, multicollinearity, reliability and normality. Also, multiple regression results were used to test hypotheses. Findings - The study revealed that financial distress significantly affects the financial performance of firms in the apparel sector more than in the food and beverage sector. Conclusion - Finally, the researcher suggests that stakeholders, including regulatory authorities and researchers, are encouraged by the study to be more attentive to the operations of the apparel sector and the food and beverage sector to improve financial performance in the future.
The Impact of Financial Inclusion on Poverty Level in the South Asian Countries
(Department of Finance, Faculty of Commerce and Management Studies University of Kelaniya Sri Lanka, 2024) Dodamgodage, P. A.; Perera, L.A.S.
Introduction - This research studies the Impact of financial inclusion on poverty levels in South Asian countries. Poverty is one of the most critical problems confronting society today. Methodology - The study sample consists of Five South Asian countries. The data was collected from 2004 to 2021 to determine the impact of financial inclusion on poverty levels in South Asian countries. The number of Bank branches per 100000 adults, Number of ATMs per 100000 adults, Outstanding deposits with commercial banks (% of GDP), and Outstanding loans from commercial banks (% of GDP) represent the study's independent variables. The poverty Headcount ratio represents the Dependent variable. Panel data regression model is used as cross-sectional and time series nature of data through STATA software. Findings - Based on the results, Findings also revealed that the Number of ATMs per 100000 adults significantly impacts the Poverty level in South Asian countries, and the Financial Access dimension has a partially significant impact on the Poverty Level in South Asian Countries. Conclusion - The model results derived that the Financial Access dimension partially impacts the Poverty level. The impact of the Usage dimension is not significant on the poverty level. Number of Bank branches per 100000 adults, Outstanding deposits with commercial banks (% of GDP), and Outstanding loans from commercial banks (% of GDP) do not significantly impact the Poverty level in South Asian countries. The study's findings will guide decision-makers of the nations, Governments, academics, and other stakeholders in strategic planning and effective decisions.
The Impact of Financial Inclusion on Poverty Level; Evidence from Selected East and Southeast Asian Countries
(Department of Finance, Faculty of Commerce and Management Studies University of Kelaniya Sri Lanka, 2024) Peiris, R.L.T.; Perera, L.A.S.
Introduction - This research studies the Impact of financial inclusion on poverty levels in the East and Southeast Regions. Methodology - The sample of the study consists of ten East and Southeast Asian countries, and the data was collected from 2013 to 2022 to determine the impact of financial inclusion on poverty levels in the countries belonging to East and Southeast Asian countries. Number of Bank branches per 100,000 adults, Number of ATMs per 100,000 adults, Outstanding deposits with commercial banks (% of GDP) and Outstanding loans from commercial banks (% of GDP) represent the study's independent variables. The poverty headcount ratio represents the dependent variable. Panel data regression model is used as cross-sectional and time series nature of data. Findings - Based on the results, Findings also revealed that the number of Bank branches per 100,000 adults, the Number of ATMs per 100,000 adults and Outstanding loans from commercial banks (% of GDP) significantly impact the Poverty level in East and Southeast Asian countries and Financial Access dimension has a significant impact on the Poverty Level. In contrast, the financial usage dimension has a partial significance on the poverty level in the East and Southeast Asian Countries. Conclusion - The final results of the three models derived that the Financial Access dimension significantly impacts the Poverty level. The impact of the Usage dimension is partially significant on the poverty level. The number of Bank branches per 100,000 adults, Number of ATMs per 100,000 adults and outstanding loans from commercial banks (% of GDP) significantly impact the Poverty level in East and Southeast Asian regions. The findings of the study will guide decision-makers of the countries, governments, academics, and other stakeholders in making their strategic planning and effective decisions.
Impact of Fintech on Economic Growth: Evidence from Asian Countries
(Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2022) Tashikala, H.A.L.; Perera, L.A.S.
Purpose: Fintech, otherwise called internet finance or digital financial inclusion, simply refers to an amalgamation of finance and information technology. The objective of this study is to examine the effect of Fintech to the economic growth of Asian countries. The sub objectives are to find out whether there is any impact of depth of ATM’s, depth of Credit Cards, depth of Debit Cards and depth of POS terminals on the economic growth of Asian countries. Design/Methodology/Approach: The research uses descriptive statistics, and the panel data regression technique is used to analyze the study. And uses deductive research logic and a quantitative research approach. The total population consists of all Asian Countries. Eight countries were selected as the sample. All the data collected falls into the period between 2009 -2020. Findings: The Research analysis has followed a fixed effect model and it includes Depth of ATMs and Depth of Debit Cards which are significant towards economic growth. Depth of Credit cards and Depth of POS terminals shows insignificant relationship with economic growth. The results emphasize that the overall model is statistically significant, and researcher conclude Fintech and economic growth of Asian countries have a significant relationship. Originality: This is one of the pioneer studies conducted on FinTech and economic growth for South Asian countries.
Impact of Firm Characteristics and Macroeconomic Variables on Liquidity Risk of Listed Commercial Banks in Sri Lanka
(Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2021) Anurasiri, H.M.M.H; Perera, L.A.S.
Introduction: In this study, researcher make an effort to identify the nature of the impact of firm characteristics and macroeconomic variables on liquidity risk of banking sector in Sri Lanka by using 9 listed commercial banks. Design/Methodology/Approach: The study is a basic research and it aims to conduct a quantitative research by using deductive approach and designed on casual research by empirically testing the impact of 9 independent variables on liquidity risk of listed commercial banks in Sri Lanka and used Random-Effect Panel data Regression method to analyze the data. Findings: Leverage, Net Interest Margin, Bank Size, Interest Rate and Exchange Rate show a significant impact on Liquidity Risk of Listed commercial banks in Sri Lankan context and at the same time; Capital Adequacy Ratio, Non-Performing Loans, Return on Assets, and Inflation show an insignificant impact. Conclusion: Findings of this paper will help banks’ managers to reduce liquidity risk and keep their banks at a better liquidity position.
Impact of Firms Specific Factors & Macroeconomic Factors on Debt Financing: Evidence from Capital Goods, Consumer Service and Foods Beverage & Tobacco Sectors in Sri Lanka
(Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2021) Pankaja, H.P.H.; Perera, L.A.S.
Introduction: The purpose of this study is to identify the impact of firms' specific factors and macroeconomic factors which determine the level of debt financing over equity financing of the capital goods, consumer service, and food, beverage, and tobacco sectors in Sri Lanka. Design/Methodology/Approach: Pecking order theory, agency theory, and trade off theory are taken to explain the relationship between debt financing. The population of the research is twenty sectors and two hundred and twenty-five non-financial companies listed on the Colombo stock exchange (CSE) in Sri Lanka. We are only focusing on 3 sectors, including 15 non-financial companies, selected for the sample, based on the market capitalization and using annual reports from the year 2011 to 2020 as the sample period of this research. A Panel Regression is performed using the E-Views 10 and Stata 13 software to analyses the calculated ratios for each factor. Findings: Based on the findings of a study involving a number of variables, the firm's leverage is negatively related to its performance and interest rates, but agency cost of debt, tangibility, liquidity, sales growth, non-debt tax shield, and inflation rate are all positively related to leverage. Furthermore, it found that firm performance and interest rate number have a negative significant effect on the dependent variable, liquidity, inflation rate have a positive significant effect on the dependent variable, while all other variables are insignificant to the model. Agency cost, tangibility, sales growth, non-debt tax shield, firm age, and size of the firm are not in line with the hypotheses developed. Conclusion: Evidence from past research is found to be proven with the results generated. This study contributes to enhancing the existing literature through analyzing the impact of factors on debt financing in non-financial companies listed in Sri Lanka.
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 Sri Lanka, 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 in the Sri Lankan context with the objective of, determine the impact of loan portfolio diversification on performance of licensed commercial banks in Sri Lanka. Design/ Methodology/ Approach: Nonprobability sampling technique is used to select 10 banks out of 26 licensed commercial banks in Sri Lanka for the period of 2010 to 2019. Data were analyzed 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.