13th Students’ Research Symposium 2023/2024

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The Economic Policy Uncertainty Impact on Firms’ Capital Structure Evidence from Consumer Services Sector in Sri Lanka
(Department of Finance, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka., 2025) Harshani, M. M. E.; Fernando, J. M. R.
Introduction: This study investigates the impact of Economic Policy Uncertainty (EPU) on the capital structure decisions of consumer services firms listed on the Colombo Stock Exchange in Sri Lanka. Specifically, it examines (1) the relationship between EPU and market leverage (ML), and (2) the effect of EPU on book leverage (BL). Methodology: Utilizing a quantitative research approach, the analysis is based on panel data from 2014 to 2023. The study covers 10 consumer service companies in Sri Lanka over a ten-year period. EPU data was collected from the EPU index scores provided by the World Bank, while other variables were gathered from audited annual reports and DataStream. Findings: The findings reveal a significant negative relationship between EPU and both ML and BL, suggesting that heightened economic uncertainty prompts firms to adopt more conservative financial strategies. Among the control variables, firm size shows a positive correlation with leverage, indicating that larger firms are better positioned to access debt markets. Profitability, on the other hand, has a negative relationship with leverage, as more profitable firms tend to rely on internal financing. Other variables, including tangibility, EBIT, GDP, and board size, exhibit limited or no significant influence on leverage decisions in the context of high EPU. Conclusion: These findings underscore the critical role of EPU in shaping corporate financial strategies and highlight the continued relevance of firm-specific factors. When economic policy uncertainty rises, companies tend to reduce borrowing, resulting in lower market and book leverage. Policymakers should aim to create a stable economic environment and enforce transparent risk disclosure practices to enhance market resilience. Meanwhile, firms should implement robust financial strategies to navigate uncertainty effectively, and investors may prefer companies with lower debt exposure during volatile periods.
Impact of Cloud Enterprise Resource Planning System Adoption among Listed Manufacturing Companies in Sri Lanka
(Department of Finance, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka., 2025) Pelakatige, E. P. L. S.; Samarawickrama, A. J. P.
Introduction: ERP cloud systems have become an intrinsic part of contemporary business operations to achieve efficiency, decision making, and competitiveness. This present research attempts to explore whether the adoption of cloud ERP results in enhanced performance among Sri Lankan listed manufacturing companies, mainly in ensuring processes are seamless and reducing any lag in operational processes. This research mainly aims to explore the significant factors that affect the successful adoption of cloud ERP systems and investigate their impact on the performance of listed manufacturing firms. It places special focus on top management support, organizational culture, IT knowledge, and business process reengineering as those factors that contribute much to ERP implementation outcomes. Methodology: This study follows a quantitative methodology, where primary data from 35 listed manufacturing companies in Sri Lanka are gathered through structured surveys distributed among key personnel. The response rate of 71% provides a robust grounding for the data. Statistical tools are used in descriptive statistics, correlation analysis, and regression modeling to test the relationship between ERP adoption and organizational performance. This study measures firm performance as the dependent variable while top management support, organizational culture, IT knowledge and business process reengineering are independent variables. Findings: It has been deduced that cloud ERP adoption greatly improves organizational efficiency, enhances the power of decision-making, and brings improvements in financial performance. Critical success factors for successful implementation are top management support and organizational culture, and to some extent, IT knowledge and business process reengineering have been positively related. Cloud ERP systems have tremendous potential for improving operational outcomes and thereby promote competitiveness among manufacturing organizations. Conclusion: The study finds evidence that the adoption of cloud ERP systems has a positive influence on the operational and financial performance of Sri Lanka's listed manufacturing companies. These results provide useful insights to the business leaders and policymakers with respect to the strategic planning of resource allocation for optimizing ERP implementation for long-term benefits.
The Impact of Loan Portfolio Diversification on Bank’s Credit Risk: Evidence from Sri Lanka
(Department of Finance, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka., 2025) Kalpani, W. S. N.; Dissanayake, D. M. U. H.
Introduction: This study investigated the impact of loan portfolio diversification on the risk of commercial and specialized banks in Sri Lanka. Although the impact of credit diversification on enhancing fundamental stability and competitiveness needs to be considered, research on credit portfolio diversification in Sri Lanka is limited. Therefore, this study is helpful in that regard. Methodology: The sample consisted of 12 Domestic banks in Sri Lanka and the research period is 2009–2023. The data for the study is collected from secondary sources, such as the Annual report, CBSL report, and Sustainability report. The research philosophy of this research is positivism. The collected panel data is analyzed using the STATA software. Findings: The findings suggest that product-based diversification of the loan portfolio has a significant impact on NPLR, while industry-based diversification of the loan portfolio does not appear to have a significant impact. These findings may be valuable for banks in managing their capital adequacy, deposit levels, and cost efficiency to improve their financial performance and reduced credit risk. Conclusion: The study investigated impact of loan portfolio diversification on credit risk of banking industry in Sri Lanka. This study analysis has two independent variables, three control variables and two dependent variables. There are non-performing loan ratio and Loan loss provisioning ratio as dependent variable and, as independent variables, there are HHI index of product wise (HHIp) and HHI index of industry wise (HHIs). Here is data analysis through the STATA-13 software. Further research on loan portfolio diversification and its impact on credit risk in the Sri Lankan banking sector could explore several avenues beyond the current study. First, future studies could delve deeper into the role of macroeconomic variables such as inflation, exchange rates and GDP growth. Another area for further research is the impact of non-traditional banking products, such as digital loans and microfinance, on credit risk.
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.
Phycological and demographical factors influencing cryptocurrency investment intention with special reference to the western province people in Sri Lanka
(Department of Finance, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka., 2025) Jayawickrama, K. D. D. T.; Samarawickrama, A. J. P.
Introduction: This research investigates the psychological and demographical factors that influence cryptocurrency investment intentions among people in the Western Province of Sri Lanka. The study takes place against the backdrop of a rising trend towards cryptocurrencies amidst a population group that is actively using digital and financial resources. There is a significant knowledge gap regarding cryptocurrency investment in Sri Lanka. Examining what factors affect this gap and how those factors influence it is critical to promoting informed decision-making and responsible participation in the cryptocurrency market. Methodology: A quantitative research approach was employed, utilizing a structured questionnaire to gather data from 384 respondents in the Western Province. The study examined psychological determinants alongside demographic variables including age, gender, education, and income. Data analysis was conducted using SPSS software to evaluate the relationships between these variables and investment intentions. Findings: The analysis revealed that psychological factors significantly influence cryptocurrency investment intentions, with perceived trust emerging as the most influential variable. Demographic analysis showed that income and education levels positively correlate with investment intentions, while age demonstrates a negative correlation. Gender was found to have a significant but complex relationship with cryptocurrency adoption patterns. Conclusion: The study provides valuable insights into cryptocurrency adoption dynamics in Sri Lanka's developing market context. These findings have practical implications for policymakers, financial institutions, and cryptocurrency platforms in developing strategies for promoting responsible investment practices and market development, helping people to invest wisely and supporting the growth of the market.
The Impact of Firm-Specific and Macro-Economic Factors on Financial Performance: Evidence from Listed Finance Companies in Sri Lanka
(Department of Finance, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka., 2025) Nisansala, E. K. S.; Tennekoon, S. T. M. S.
Introduction: Company performance plays an important role in national economic growth and employment creation in the country. Both macro and microeconomic factors influence a firm’s performance. This study seeks to examine the impact of firm-specific and macroeconomic factors on the financial performance of listed finance companies in Sri Lanka. It tries to find out the various factors which determine the company performance of listed finance companies. Methodology: The study investigates the effect of the inflation rate, interest rate, and gross domestic product (GDP) growth rate, while the firm characteristics were firm size, leverage, and capital ratio. The dependent variable financial performance is measured as return on assets (ROA). The analytical approach involves employing panel data regression techniques using STATA. Data for analysis were sourced from company annual reports and Central Bank reports covering the period from 2014 to 2023 inclusive of both years. There are 35 CSE-listed entities under the diversified financial industry, out of which this study sample contained 33 entities. Findings: According to the findings, the GDP growth rate and inflation rate had a positive and significant effect, while the interest rate had a positive but non-significant effect on the financial performance of listed finance companies in Sri Lanka. Second, the firm characteristics demonstrate that firm size had positive and significant effects on return on assets (ROA) while leverage had a negative significant effect on return on assets (ROA). Conclusion: This research provides valuable insights to policymakers, professionals in finance, and management teams of finance companies in Sri Lanka. This study adds to the existing literature on how internal and external variables influence company outcomes by analyzing the effect of firm-specific and macroeconomic factors on financial performance using return on assets as a measure.
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.
The Day of the Week Effect of Stock Returns: Empirical Evidence from the Colombo Stock Exchange
(Department of Finance, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka., 2025) Rupasingha, P. H. P. H.; Madhushani, P. W. G.
Introduction: The purpose of this study is to investigate the Day-of-the-Week Effect on stock returns in the Colombo Stock Exchange (CSE), examining whether specific days consistently exhibit abnormal returns. By analyzing the All-Share Price Index (ASPI) data from 2014 to 2024, the research explores how economic crises, such as the Easter Sunday Attack (2019), the COVID-19 pandemic, and Sri Lanka’s financial collapse (2022), influenced these anomalies. Methodology: Statistical techniques, including Ordinary Least Squares (OLS) regression and unit root tests, confirmed the presence of significant daily return patterns. The data sample consists of daily stock returns of all companies listed on the All Share Price Index (ASPI) from April 2014 to April 2024. The data was analyzed in two distinct periods: pre-crisis (2014–2019) and post-crisis recovery (2019–2024). Secondary data was used and retrieved from the CSE website. Findings: Mondays consistently recorded negative returns across all periods, suggesting a “Monday effect.” Thursdays showed the most significant positive returns, particularly during the post-crisis recovery period (2019–2024). Conclusion: The study confirms the existence of the day-of-the-week effect in the Colombo Stock Exchange, with distinct variations during economic crises and recovery periods. These findings underscore the need for further exploration into behavioural finance and its role in emerging markets. Future studies should include cross-market analyses to broaden understanding and applicability. The study provides recommendations to investors and policymakers; investors can understand these patterns and use them to enhance their trading strategies, optimizing buy-sell decisions based on predicted daily returns. Policymakers can gain insights into market inefficiencies and offer opportunities to improve regulatory frameworks and foster greater stability.
The Impact of Environmental, Social and Governance (ESG) Factors on Financial Performance - Evidence from Licensed Banks in Sri Lanka
(Department of Finance, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka., 2025) Dilhani, G. H. M. S.; Dissanayake, D. M. U. H.
Introduction: In this context, the integration of Environmental, Social, and Governance (ESG) factors has emerged as one of the critical determinants of financial performance in banking, especially in emerging markets such as Sri Lanka. The study will try to establish how ESG practices have influenced the financial performance of licensed banks in Sri Lanka, focusing on Return on Assets (ROA) and Return on Equity (ROE). Methodology: This study collected data from 10 licensed banks in Sri Lanka over a sample period of fifteen years, from 2009 to 2023. Using a quantitative approach, this study collected secondary data from the annual and sustainability reports of the selected banks. Environmental, social, and governance (ESG) factors were used as the independent variables of the banks selected. Both Return on Equity and Return on Assets were used to measure the financial performance of the selected banks. Further, bank size, leverage ratio, and dividend yield were used as the control variables. A series of fixed-effects panel regression models was used in this study to analyze the data. Findings: The results of the study revealed that there is a positive and significant impact between Environmental, Social, and Governance (ESG) factors and ROE and ROA, whereas all the other hypotheses were accepted. In conclusion, this study revealed that the ESG factors significantly impact the financial performance of the licensed banks in Sri Lanka. Conclusion: The study concludes that ESG integration is no longer solely a regulatory or ethical requirement but also a strategic imperative for financial performance and competitive advantage. It is encouraged that the licensed banks in Sri Lanka adopt comprehensive ESG frameworks with a view to ensuring sustainability and profitability.
The Determinants of the Demand for Motor Reinsurance in Sri Lankan General Insurance Market
(Department of Finance, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka., 2025) Hettiarachchi, C. K.; Sudasinghe, S. L.
Introduction: This study investigates the determinants of the demand for motor reinsurance in the Sri Lankan General Insurance market, focusing on financial indicators such as return on total assets, growth of gross written premiums, underwriting risk, solvency margin, financial leverage, and reinsurance ratio. The purpose of this study is to identify what are the factors affecting the demand for motor reinsurance in the Sri Lankan General Insurance market. Methodology: The target population of this study was the Sri Lankan General Insurance market. The study applies the quantitative research approach with deductive research logic, and all the secondary data are taken from the annual reports of the General Insurance companies and the IRCSL from 2015 to 2022. Data analyzed by using STATA software, which included statistical tests such as descriptive statistics, diagnostic tests including correlation testing, heteroscedasticity testing, serial autocorrelation testing, cross-sectional dependency, and regression analysis. Findings: The findings of the study highlighted that underwriting risk and solvency margin are the key determinants of the demand for motor reinsurance in the Sri Lankan General Insurance market. Higher underwriting risk drives insurers to cede more risks to reinsurers, supporting the risk-bearing hypothesis. Conversely, companies with stronger solvency margins tend to retain more risks. Conclusions: The study concludes that managing underwriting risk and maintaining robust solvency margins are critical for optimizing reinsurance strategies and structure for the Sri Lankan General Insurance companies.
Factors Affecting Financial Distress Among Sri Lankan Young Working Adults in Sri Lanka
(Department of Finance, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka., 2025) Pihanage, P. I. M.; De Zoysa, R. P. S.
Introduction: This study focuses on the factors that influence financial distress, spending behavior, saving behavior, investment behavior, and financial literacy among young working adults in Sri Lanka. Against the backdrop of challenging economic conditions in Sri Lanka, understanding financial behaviors and their impact on financial well-being has become increasingly important. The aim of this study is to determine the factors that contribute to financial distress among young working adults in Sri Lanka, focusing on the relationship between spending behavior, saving behavior, investment behavior, and financial literacy. It attempts to examine how these behaviors and financial literacy affect financial distress in this demographic in Sri Lanka. Methodology: This study uses a quantitative research design to explore the impact of financial behaviors (spending, saving, and investing) and financial literacy on financial distress among young working adults in Sri Lanka. A structured online questionnaire was used to collect data targeting 384 young professionals aged 18 to 34 years in both the public and private sectors. The survey was distributed via Google Forms and the responses were analyzed using SPSS (27) software. The research follows a descriptive analytical approach in a positive model with hypotheses developed based on empirical literature. The sample size was determined using Krejcie and Morgan’s table to ensure statistical rigor. Findings: According to the findings, spending behavior, saving behavior, and investment behavior show a statistically significant impact on financial distress among young working adults. Poor spending habits directly contribute to higher financial distress, while positive savings and investment behaviors help mitigate financial challenges by providing financial security and future growth opportunities. On the other hand, financial literacy did not show a statistically significant impact on financial distress in this study. This suggests that knowledge alone is not enough but is accompanied by active financial practices. Moreover, the variation in financial distress across different groups here further highlights demographic insights. Older respondents (aged 31-35) report higher financial distress due to the pressures of midlife and increased family responsibilities. Married individuals, especially those with children, experience higher levels of financial distress compared to singles, reflecting the economic burden of supporting their families. Moreover, low-income earners face greater difficulties in managing spending and savings, and financial difficulties are inversely related to income levels. Conclusion: The study highlights the critical need for interventions aimed at promoting responsible financial behavior. Targeted financial education programs, practical tools for budgeting, and initiatives to encourage savings and investments can help alleviate financial distress among this demographic. These findings provide valuable insights for policymakers, educators, and financial institutions seeking to enhance the financial resilience of Sri Lanka’s youth workforce.
The Impact of Digital Finance literacy and financial socialization on Personal Finance management - Evidence from Undergraduates of University of Kelaniya
(Department of Finance, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka., 2025) Kulasekara, K. M. A. Y.; Kethmi, G. A. P.
Introduction: The purpose of this study is to understand the connection between the digital finance literacy and financial socialization on personal finance management among university students in Sri Lanka. Effective personal financial management is the cornerstone of building a secure and prosperous future. As the society continues to embrace the use of digitally enabled financial products, it becomes important to unravel the importance of digital finance literacy particularly for the young people who are in preparatory stages of joining the working world. Also financial socialization which is the socialization of families, peers and cultures affects the financial attitudes and behaviors. Methodology: The study identified a sample of 384 undergraduates at the University of Kelaniya. This study was carried out based on primary data and followed the survey questionnaire research strategy. Digital Finance attitudes, Digital finance knowledge, Digital finance awareness, Parental financial socialization, Peer influence on financial socialization, Media influence on financial socialization were used as independent variables and Personal finance management was used as the dependent variable. The major technique to collect data from the undergraduates was the five-point Likert scale questionnaire. A multiple regression analysis was conducted, and the SPSS statistical package was used to analyze the data. Findings: According to the study's findings, all of six independent variables had a statistically significant positive relationship with the dependent variable among the undergraduates in University of Kelaniya. Independent variables do not influence each other much because the results, inter-correlation matrix, VIF and tolerance values and Cronbach alpha value show all the data is more reliable. In light of the outcomes of the analysis, the authors nod towards the centrality of digital finance literacy and financial socialization, building on the cumulative research evidence. Conclusion: The final result highlights that the overall model is statistically significant, and the researcher suggests that future researchers might consider employing long-term panel surveys to monitor shifts in Digital financial behavior and attitudes over an extended timeframe.
A Study on Awareness and Positive Attitudes Towards Cryptocurrency Investments Among Millennials in Sri Lanka.
(Department of Finance, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka., 2025) Samarasinghe, S. K. S. D.; Herath, H. M. N. P.
Introduction: The increasing interest in cryptocurrency investments among millennials has made understanding their awareness and attitudes toward these digital assets crucial. The current study focuses on assessing the influence of impact of awareness and positive attitude on the behaviour of Sri Lankan millennials regarding cryptocurrency investments. Methodology: The research adopted a quantitative-deductive approach, with data gathered through an online questionnaire from 394 Sri Lankan millennials. The independent variables were awareness and attitude, while the dependent variable was investment behavior. Statistical analyses using SPSS were conducted on reliability, descriptive, correlation, and multiple regressions. Findings: Based on the findings, it is evident that both awareness and positive attitudes have a significant influence on cryptocurrency investment behavior. Awareness appears to play a slightly stronger role in shaping investment decisions. The correlation analysis shows strong positive relationships among these variables, supported by inter-correlation, VIF, and Cronbach’s alpha values, which confirm the reliability of the data. Conclusion: The study highlights the need to enhance awareness and foster positive attitudes to promote responsible cryptocurrency investments among millennials. These insights can guide policymakers and educators in developing programs to improve financial literacy and investment decision-making.
The Effect of Financial Literacy on Firm Performance Thorough Mediation of Financial Access and Financial Risk Attitude: Evidence from Selected Manufacturing MSME in Ratnapura District
(Department of Finance, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka., 2025) Yatawatta, Y. S. K.; Weligamage, S. S.
Introduction: The study assesses the effect of financial literacy on the growth of manufacturing micro, small and medium enterprises (MSMEs) in Ratnapura District, Sri Lanka while examining access to finance and financial risk as mediating variables. This study is based on the premise that MSME sector is critical in the economic development of a nation through employment creation, growth of the Gross Domestic Product (GDP), and investment in innovations. Even with this significance, financial literacy remains an area of concern especially in as far as the ability of MSMEs to have access to formal financial systems and making rational economic decisions is concerned. Methodology: A quantitative methodology was adopted that used a self-administered structured questionnaire designed for 145 MSME owners/managers. Data were analyzed using SPSS with the aid of regression and mediation analysis using Hayes’ Process Macro. Financial literacy, financial access, financial risk attitude and business performance were measured with the use of verified and standardized constructs. Findings: Having knowledge of finance leads to greater business results through more integration into the economy and a more diversified risk attitude. In addition, MSME loans, credit and other financial services are more accessible as financial education enables better risk assessment. Mediation analysis assists in establishing that financial literacy, firm performance and financial access, and financial risk attitude are all closely interrelated in a cause and effect cycle where each is mediating the other. Conclusion: Financial literacy in the case of owners of MSMEs is crucial in increasing their financial inclusion and risk profile therefore improving the success of their businesses. There is need for financial education, also measures to correct the problem of illiteracy should be taken. Other possible mediating variables and frameworks could be investigated in future studies and other geographical areas or sectors could be incorporated.
The Moderating Impact of Financial Performance and Stock Returns on the Relationship Between Corporate Governance and Corporate Value. Evidence from Top-Rated Companies in Sri Lanka’s S&P SL 20 Index
(Department of Finance, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka., 2025) Abeywickrama, H. W. A. D. S.; Kethmi, G. A. P.
Introduction: This research demonstrates how financial performance and stock returns moderate the link between corporate governance and corporate value. The study has been conducted on firms in the S&P SL 20 Index. It addresses how sound governance mechanisms affect firm value, and how stock returns and financial performance either enhance or suppress these impacts. Methodology: The study uses a quantitative research methodology where data from 20 listed firms in the S&P SL 20 index is analyzed over the period 2014 to 2024. To conduct this analysis secondary data from annual and quarterly reports were utilized. The diagnostic test used the Panel data analysis to assess the model's validity. Further, to analyze the moderate effect of stock return and financial performance regression models were developed. Findings: This analysis shows a significant relationship between corporate governance and corporate value, a weakly positive relationship. Stock returns moderate the relationship between better corporate governance and corporate value. Financial performance, which is measured through ROA and ROE also enhances the link between good corporate governance and corporate value. Conclusion: The study supports the importance of proper governance structures in the development of corporate values. The findings are informative for policymakers and investors, calling for efforts to build governance mechanisms in firms while relying on financial indicators and market conditions to increase firm value.
The Impact of Capital Structure on Firm Performance: A Comprehensive Analysis of the Sri Lankan Plantation Companies Before and During the Crisis Evidence From Selected Listed Plantation Companies in Sri Lanka
(Department of Finance, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka., 2025) Vitharamage, V. N. R.; Gunasekara, H. M. A. L.
Introduction: The purpose of this study is to determine the impact of capital structure on firm performance. This study provides a comprehensive analysis of the Sri Lankan plantation companies before and during the crisis as this sector remains an unexplored area which plays an important role in their economies. Methodology: This research uses positivism research philosophy and the quantitative research approach and uses the convenience sampling method. This study is primarily based on secondary data that were extracted from the annual reports of companies listed in Colombo Stock Exchange (CSE) over the past eight-year period from 2016 to 2023. Balanced Panel Data (BPD) of 15 plantation companies were analyzed using STATA software, which included statistical tests such as normality, multicollinearity, heteroscedasticity, autocorrelation, cross sectional dependance, and panel regression analysis. Further this study uses a comparison test to identify the statistical difference in the periods. Findings: According to the findings of the study, the results confirm that there is a statistically significant difference in terms of ROE and ROA before and during the crisis. All the independent variables, excluding TDTE, also show a statistically significant difference between the periods. According to the regression analysis, it shows a negative and statistically significant relationship between TDTE and ROE and positive and statistically significant relationship between ICR and ROE. TDTA negatively impacts ROA, and the effect is statistically significant. As well as there is a statistically significant causal relationship between ROA and Interest Coverage Ratio. Finally, the overall models are statistically significant. Conclusion: The findings indicate that the crisis had a notable effect on plantation companies' financial performance and suggest that debt is not a primary strategy to cope with the crisis. Therefore, this study is advisable for firms to consider their funding strategies and manage their total debt wisely to sustain the overall performance by adapting to the market conditions.
The Impact of Monetary Policy on Stock Market Performance: Evidence from Sri Lanka
(Department of Finance, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka., 2025) Nimesha, A. T.; Piyananda, S. D. P.
Introduction: The study explores the pivotal role of monetary policy in shaping stock market performance, focusing on Sri Lanka's All Share Price Index (ASPI). It highlights the critical influence of monetary tools like Treasury Bill Rate (TBR), Money Supply (M2), Standing Lending Facility Rate (SLFR), and Statutory Reserve Ratio (SRR) alongside macroeconomic variables like the Exchange Rate and Inflation Rate. By addressing the gaps in existing literature, particularly during the post-COVID-19 economic crisis, the research emphasizes the dynamic interplay between monetary policy and market performance. Methodology: This will be a quantitative test based on secondary data from July 2014 to August 2024, which was extracted from the Colombo Stock Exchange and Central Bank of Sri Lanka. Analyzing the research will draw upon econometric methods which include tests of unit roots, regression analysis, and diagnostic checks for multicollinearity, heteroskedasticity, and autocorrelation in order to draw conclusions about how monetary policy variables affect the ASPI. The model has been developed considering its robustness and reliability by incorporating all the required macroeconomic indicators as control variables. Findings: The above analysis indicates that monetary policy variables such as money supply, treasury bill rate, and inflation rate are positively and significantly related to ASPI. Thereby, these variables prove to be the important contributors toward improving stock market performance in Sri Lanka. On the contrary, SLFR and ER negatively influence ASPI, reflecting the devastating effects of the tight monetary stance and currency depreciation on market dynamics. The contribution of the SRR, though positive, is insignificant to explain the trend in the stock market. All diagnostic tests prove that the estimated model is reliable and free from multicollinearity, heteroskedasticity, or autocorrelation. The findings emphasize that monetary policy does not have a one-way effect on the stock market in Sri Lanka. Conclusion: Monetary policy significantly influences the performance of the stock market in Sri Lanka; therefore, proper monetary interventions are very important in creating a stable and prosperous market. Though the findings support theoretical expectations and prior literature on the subject, there are limitations to this present study, which include exclusion of some of the key macroeconomic variables, such as fiscal policy, and also sector-specific analysis. Thus, future study could elaborate more on those dimensions and create more comprehensive insights. These are very important findings in terms of the policy implications for policymakers and investors in developing an appropriate view of how monetary policy affects stock performance in emerging economies.
Impact of Intellectual Capital on Profitability of Licensed Specialized Banks of Sri Lanka: Evidence from Sri Lanka
(Department of Finance, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka., 2025) Jayasooriya, J. P. D. K.; Samarawickrama, A. J. P.
Introduction: This study contributes to investigate the impact of intellectual capital (IC) on the profitability of six licensed specialized banks in Sri Lanka. Methodology: Human Capital Efficiency, Structural Capital Efficiency, Capital Employed Efficiency and Relational Capital Efficiency are the independent variables used in this study and ROA, ROE are the dependent variables. For empirical problems, this research addresses balanced panel data with 6 Licensed Specialized Bank of Sri Lanka from 2013 to 2022, based on data availability for the study. STATA will be used for data analysis through regression while testing my hypothesis. Findings: This analysis shows a significant positive relationship between MVAIC and profitability. Among the MVAIC components, there is a significant positive impact between HCE and profitability (ROA, ROE). However, this study shows that there is no significant impact on profitability with SCE and RCE. However, although CEE shows a significant positive impact on ROA, it is not significant on ROE. Conclusion: The result highlights that the overall model is statistically significant. According to the findings, the need to establish targeted strategies to improve IC, promote innovation, and profitability in the banking environment is evident.
Analyzing the Impact of ESG Score on Equity Portfolio Performance: A Comparative Study of High and Low ESG Portfolios Evidence from the Largest Economy in South Asia: India
(Department of Finance, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka., 2025) Nanayakkara, N. S. S. T.; Herath, H. M. N. P.
Introduction: In today's investors are now more frequently considering environmental, social, and governance performance when making investment decisions. India is one of the largest economies in the world and ESG considerations have been implemented in India very recently. This study focuses on analyzing the effect of Environmental, Social, and Governance (ESG) scores on equity portfolio performance in the Indian stock market. Methodology: This research utilizes a quantitative approach with data from the India National Stock Exchange's Nifty 500 index for 2019–2022. Daily stock returns and ESG scores were recorded for 174 companies according to the ESG data availability. According to ESG scores the companies set to descending order and the top 20% of companies are included in the “high ESG portfolio,” and the bottom 20% companies are included in the “low ESG portfolio”. Value-weighted and equal-weighted methods are used to compute the portfolio return. Findings: The findings of this study show that both equal weighted and value weighted approaches, High ESG portfolio does not outperform significantly low ESG portfolios. Conclusion: The results indicate that high ESG portfolios marginally underperform insignificantly low ESG portfolios, suggesting that investing in ESG-focused stocks may not lead to significantly higher returns or higher losses. This creates a favorable scenario for investors, allowing them to earn while incorporating sustainability and ethical considerations into their investment strategies.
The Effect of Company Growth, Managerial Ownership, and Debt Policy on Dividend Policy: Evidence from Manufacturing Companies in Sri Lanka
(Department of Finance, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka., 2025) Madhubhashini, H. B. S.; Ranjani, R. P. C.
Introduction: The study probes into the effect of company growth, managerial ownership, and the debt policy on dividend policy of listed manufacturing companies in Sri Lanka. Dividend policy is the most important component of corporate finance decisions in company's trade-off between shareholder returns and the growth and financial viability of the company. This research adopts a quantitative approach in analyzing datasets from the top10 capital goods manufacturing companies of the Colombo Stock Exchange from 2014-2023. Methodology: The study attempts to fill the existing in literature with regards to manufacturing in Sri Lanka by studying three important variables of dividend policy, growth of the company, ownership by management, and debt policy. For these variables, a conceptual framework was developed to show the impact of where dividend policy would be taken as the dependent variable. Secondary data like financial statements and annual reports would be analyzed using regression models and correlation techniques via STATA software. Findings: The research has produced a significant positive impact between growth in a company and dividend policy; thus, the higher the rate of company growth, the greater the number of dividends distributed. Although a positive impact exists between managerial ownership and dividend policy, that impact is found not to be significant. The study established a significant negative impact between the debt policy and dividend policy, meaning that higher debt levels restrict a company from paying dividends. Conclusion: The findings underscore the importance of company growth as a key driver of dividend policy in Sri Lankan manufacturing firms. Managerial ownership demonstrates a positive impact however, the absence of statistical significance indicates the role of more critical factors. The negative effect of debt policy on dividends emphasizes the careful management of levels of debt by companies to sustain returns to shareholders. This study, thus, provides critical insights for investors and policymakers in the understanding of dividend policies in manufacturing.