13th Students’ Research Symposium 2023/2024

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    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.
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    Significance of Company-Specific & Macroeconomic Determinants on the Solvency of Sri Lankan Insurance Companies
    (Department of Finance, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka., 2025) Samadhith, G. A. P.; Liyanage, M. L. D. C. J.
    Introduction: This study investigates how company-specific variables including return on assets, leverage, investment yield, claims ratio, and retention ratio, as well as macroeconomic variables including GDP growth rate, inflation rate, and interest rate, affect the solvency of insurance companies. The study fills the empirical gap in Sri Lanka’s insurance industry by analyzing key determinants of life and general insurance companies’ solvency after introducing the Risk-Based Capital requirement in 2016. Methodology: The quantitative research methodology was used to analyze the key determinants of solvency by taking 12 life insurance and 10 general insurance companies operating from 2016 to 2023. Statistical methods including descriptive analysis, correlation analysis, and panel data regression analysis were used to assess the impact of selected independent variables on the solvency of insurance companies. Findings: The findings revealed that the return on assets, investment yield, and retention ratio have a significant positive influence on solvency, and the claims ratio has a significant negative influence on the solvency of both sectors, indicating the importance of operational efficiencies for greater financial stability. The GDP growth rate and the interest rate had a statistically insignificant impact on the solvency of both sectors, and the inflation rate was significant with a negative impact only on general insurance, which could be attributed to the economic volatility during the sample period analyzed. Conclusion: In conclusion, the study highlights the critical role of insurance companies’ operational efficiency and continuous monitoring of macroeconomic variables to sustain in the industry, with actionable recommendations to the regulators and insurers to maintain adequate solvency within the industry while protecting policyholders’ interests.