13th Students’ Research Symposium 2023/2024

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    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.
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    The Influence of Managerial Ownership and Firm Size on Debt Policy Evidence from Listed Manufacturing Companies in Sri Lanka
    (Department of Finance, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka., 2025) Abdullah, M.; Ranjani, R. P. C.
    Introduction: This study looks at how managerial ownership and firm size affect debt policy in listed manufacturing companies in Sri Lanka, using data from the Colombo Stock Exchange (CSE) from 2013 to 2023. It shows that when managers own shares, it reduces conflicts between managers and shareholders, while firm size impacts borrowing capacity and leverage. The research provides useful insights into how these factors influence debt policies in Sri Lanka and fills gaps in existing studies, offering practical guidance for better financial decision-making. Methodology: In this study, a quantitative approach was used, analysing panel data from 10 companies listed on the Colombo Stock Exchange (CSE) over the past 11 years. The main variables examined were managerial ownership (measured by the percentage of shares held by management), firm size (measured by total assets), and debt policy (measured by the debt-to-equity ratio). Multiple regression analysis was conducted, along with diagnostic tests like the variance inflation factor (VIF) and autocorrelation tests, to ensure the reliability of the data and the accuracy of the results. Findings: The study shows that more managerial ownership leads to higher debt because it aligns managers’ interests with shareholders. It also finds that larger companies use less debt, likely due to stronger financial positions. The analysis highlights differences in ownership and firm sizes, and the diagnostic tests confirm the results are reliable.
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    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.
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    The Impact of Industry-Specific Factors on Non-Performing Loans: “Evidence from Licensed Banks and Finance Companies in Sri Lanka”
    (Department of Finance, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka., 2025) Sewwandi, B. S.; Dissanayake, D. M. U. H.
    Introduction: Diverse studies have been undertaken on different aspects of the industry and their respective impacts on the amount of non-performing loans in licensed banks and finance companies in Sri Lanka. These generalizations apply to every financial institution and concern both profitability and stability. These data will be considered based on quantitative measures that will cover a range of years from 2012 until 2023, which include gross amounts of loans as well as liquidity ratios, loans-to-deposit ratio, return on assets (ROA), size of the bank, and the level of capital adequacy ratio (CAR) as potential explanatory variables for NPL levels among the responding banks in the study. Methodology: The research relies on panel data analysis and regression models. Data was collected from the annual reports of 10 licensed banks and 5 licensed finance companies. The statistical techniques used included normality tests, correlation, regression analyses, and diagnostic checks (e.g., heteroskedasticity, and multicollinearity). Findings: Gross loans, liquidity ratios, and CAR have direct positive effects on NPLs as loan amounts and regulatory capital requirements increase, the risks get higher. In contrast, the loan-to-deposit ratio and ROA exhibit negative relationships with NPLs, which implies that improved profitability leads to fewer loan defaults. Thus, mixed results were given on bank size since larger institutions are linked to higher risks and operational complexity. Conclusion: The results highlight the necessity for fortified risk management, custom credit policies, and enhanced regulatory frameworks to mitigate NPLs. The research adds to the scant literature on dynamics in NPL in Sri Lanka and offers facts for policymakers and financial executives to consider.
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    The Impact of Firm-Specific and Macroeconomic Factors on Financial Performance: Evidence from Companies in the Listed Food, Beverage and Tobacco Industry in Sri Lanka
    (Department of Finance, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka., 2025) Tharindra, N. B. A. N.; Tennekoon, S. T. M. S.
    Introduction: Financial performance is a crucial aspect of assessing a company's overall financial health and can provide insights into its profitability, efficiency, and growth potential. A firm's financial performance is influenced by both internal (micro) and external (macro) factors. The purpose of this study is to examine the impact of firm-specific and macroeconomic factors on the financial performance of companies listed in the food, beverage and tobacco industry in Sri Lanka. Methodology: The population was forty-five listed food, beverage and tobacco firms in Sri Lanka. The representative sample consists of the twenty listed Sri Lankan food, beverage and tobacco companies based on their overall market capitalization. Consequently, ten companies with the highest market capitalization and ten companies with the lowest market capitalization. Firm size, liquidity and leverage were considered as firm-specific factors and interest rate, inflation rate and GDP growth rate were considered as macroeconomic factors. In contrast, the return on assets ratio (ROA) was used to measure the financial performance. Using a quantitative approach, this study collected secondary data from the annual reports of the selected companies from 2014 to 2023. A series of random-effects panel regression model was used to evaluate the hypotheses. STATA software was then used to analyze the data. Findings: The findings showed that firm size and liquidity positively influenced the financial performance of food, beverage and tobacco companies exhibiting the highest level of significance at 1%. The inflation rate is statistically significant at the 5% level, while the GDP growth rate demonstrates significance at the 10% level positively with ROA. However, leverage and interest rate do not emerge as a significant factor and negatively affect for the financial performance of food, beverage and tobacco companies in Sri Lanka. In conclusion, this study revealed that firm characteristics and macroeconomic factors significantly impact the financial performance of food, beverage and tobacco industry in Sri Lanka. Conclusion: This research offers crucial insights for policymakers, investors, and management teams in Sri Lankan food, beverage, and tobacco companies. The findings provide strategic guidance for improving financial performance, particularly for food, beverage and tobacco companies operating in similar macroeconomic conditions, supporting informed decision-making and fostering industry growth.
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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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    The Impact of Financial Risk on Financial Performance Before and During the Crisis: Evidence from Listed Consumer Service Sector Companies in Sri Lanka
    (Department of Finance, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka., 2025) Wedaarachchi, W. A. T. N.; Gunasekara, H. M. A. L.
    Introduction: The purpose of this study is to investigate the impact of financial risk on the financial performance of listed consumer service sector companies in Sri Lanka before and during the crisis. This research aims to identify whether the financial performance measures and financial risk measures have been statistically different before and during the crisis and to identify the causal relationship between financial risk and financial performance. Methodology: Panel regression analysis is used in the study to investigate how operational risk, liquidity risk, market risk, and credit risk impact Return on Equity (ROE) and Return on Assets (ROA). Nineteen listed consumer service sector companies were selected, and the sample period was from 2016 to 2023. Secondary data was collected from the annual reports and websites. For testing the statistical difference between before and during the crisis, this study used a sample t-test with unequal variances and the Wilcoxon rank sum test. Findings: Operational risk and market risk have a significant positive impact on both ROE and ROA, while liquidity risk has a statistically insignificant effect on both ROE and ROA. Credit risk has a negative but significant relationship with both ROE and ROA. According to the sample t-test with unequal variances and Wilcoxon rank sum test, all variables are statistically different between the periods before and during the crisis. Conclusion: This study highlights the critical role of effective financial risk management in sustaining profitability during economic crises. While operational and market risks were associated with improved financial outcomes, higher credit risk severely impaired financial performance. The significant decline in both ROE and ROA during the crisis emphasizes the vulnerability of consumer service sector companies to economic disruptions.
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    The Impact of Financial Leverage and Working Capital Management on Financial Performance: An Analysis Before and During the Economic Crisis: Evidence from Listed Companies in The Food, Beverage, and Tobacco Industries of Sri Lanka
    (Department of Finance, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka., 2025) Wijesingha, R. M. D. L.; Gunasekara, A. L.
    Introduction: This investigation focuses on examining whether financial leverage and working capital management impact on financial performance of companies, particularly before and during the economic crisis. Special attention is given to financial performance indicators such as Return on Assets and Return on Equity. Methodology: This study analyzes panel data covering ten companies over ten years of the Food, Beverage, and Tobacco sector. Here, the company was selected based on market capitalization. Using a quantitative approach, secondary data has been obtained from the annual reports of the selected companies for this study. The independent variables are Total Debt Ratio, Inventory Conversion Period, Average Receivable Period, Average Payable Period, and the dummy variables are Covid-19, Economic Crisis, and Full Crisis Period. Control variables are Firm Size, Sales Growth, and Asset’s Tangibility. Also, a t-test and regression were mainly used for the analysis. Findings: According to t-test results, there is no statistical difference between pre-crisis and during-crisis groups. In the regression analysis, it was found that the economic crisis and Covid-19 have impacted the financial performance of the Food, Beverage, and Tobacco sector. Conclusion: It highlights the importance of effective financial leverage and working capital management practices to enhance resilience even during economic crises. It also provides valuable guidance for managers, investors, and policymakers seeking to enhance performance during challenging periods and provides a foundation for future research on capital strategies in emerging economies during economic crises.
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    The Impact of Exchange Rates on Stock Market Performance in Sri Lanka
    (Department of Finance, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka., 2025) Rajapaksha, R. A. R. A.; Gunasekara, A. L.
    Introduction: The relationship between exchange rates and stock market performance in developing economies is a topic of great interest to investors, researchers and policymakers. This paper examines the impact of exchange rates on the S&P SL20 index in Sri Lanka. This includes the exchange rate behavior of the USD, EUR, GBP, AUD and JPY against the Sri Lankan rupee. Apart from other factors in the economy, the behavior of exchange rates has made a difference in economic development and investor decisions. Therefore, the purpose of the research is to explore the relationship between exchange rates and the stock market in Sri Lanka in the short and long term. Methodology: This paper used monthly data from January 2010 to July 2024. After conducting unit root tests using ADF analysis for stationarity of all variables, the strength of association between the dependent and independent variables is measured through a correlation analysis. The ARDL model elaborates on the short- and long-run impacts, as well as using a GARCH model that captures the effect of the volatility of exchange rates on stock market returns. Descriptive statistics represent data development through the study period with the help of tables or graphs. Findings: Descriptive statistics show positive means for all variables but non-normal distributions with skewness and kurtosis. The ADF test confirmed stationarity, thus enabling further analysis. The USD has a significant negative impact, and both short- and long-run dynamics are highlighted through the ARDL model. The ARCH test does not show heterogeneity, while the GARCH model confirms volatility clusters and emphasizes the strong influence of the USD. The results emphasize that not all exchange rate movements have the same impact on the performance of the S&P SL20, and that some currencies strongly determine its performance. Conclusion: This paper highlights the relationship between exchange rates and stock market performance in Sri Lanka. Foreign exchange stability is important for market outcomes and suggests currency stabilization strategies that minimize market crashes. Investors should consider how to manage their investments against the exchange rate to maximize returns when investing in the stock market. Due to the large differences between past literature reviews and the current database and the differences in the variables considered, the current research is bound to shed new light on the short-run and long-run relationship.
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    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.