12th Students' Research Symposium 2024

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Impact of Environmental Management Practices on Financial Performance in Sri Lankan Food and Beverage Industry
(Department of Finance, Faculty of Commerce and Management Studies University of Kelaniya Sri Lanka, 2024) Jayalath, M. G. D. S.; Madhushani, P.W.G.
Purpose: To addresses a crucial gap in understanding the impact of Environmental Management Practices and financial performance in the Sri Lankan food and beverage industry, by focusing on Energy efficiency (EE), Material waste management (MWM) and Water waste management (WWM). The study aims to shed light on how sustainable practices impact the industry's financial outcomes. Methodology: A quantitative research approach was carried out by using secondary data sources such as annual reports and the Colombo Stock Exchange (CSE) website from the period of 2013 – 2022. Financial performance was measured by using Return on Assets (ROA). The chosen sample of ten companies from the CSE provides a specific focus, ensuring in-depth analysis within the context of the local Food and Beverage Industry. Findings: Panel data regression revealed that there is a significant and positive impact of MWM on ROA, highlighting that effective Material Waste Management practices significantly contribute to improved Financial Performance among the selected Sri Lankan Food and Beverage companies. Originality: The study emphasizes the need for businesses to invest in sustainable technologies, energy-efficient equipment, and material waste reduction solutions to enhance both environmental sustainability and financial outcomes.
Adoption Potential of Fintech Services: A Study Based on Employees of the Financial Institutions in Sri Lanka
(Department of Finance, Faculty of Commerce and Management Studies University of Kelaniya Sri Lanka, 2024) Rathnayake, R.M.A.R.; Kethmi, G.A.P.
Introduction: FinTech can be identified as software, mobile applications, or any other technologies designed to enhance and automate conventional financial services for both consumers and enterprises. Sri Lanka which can be identified as a developing country, the adoption of FinTech would be a crucial factor to improve the economy of the country. This study was conducted to address the research problem of the adoption potential of fintech services in Sri Lanka. The main objective of the study is to examine the adoption potential of fintech services by using the perceptions of the employees of financial institutions in Sri Lanka. Methodology: Performance expectancy, effort expectancy, social influence, facilitating conditions, perceived reliability, added value, self-efficacy and nervousness are the independent variables used in this study and the dependent variable is the actual use of fintech. The data sample of the study is the employees of financial institutions, and the sample size was 384 employees. Data is collected by distributing questionnaires. A regression model is developed to achieve the objective using the SPSS software and further, reliability and validity of the data is investigated using the goodness of fit tests. Findings: According to the results, performance expectancy, effort expectancy, social influence, facilitating conditions, and perceived reliability have an impact on the actual fintech usage in Sri Lanka, while added value, self-efficacy and nervousness do not have a significant impact on the actual fintech usage in Sri Lanka. Conclusion: In conclusion, the study envisions that its findings will not only benefit the financial industry in Sri Lanka but also serve as a valuable reference for other sectors. The study aims to be a milestone, providing insights into the adoption potential of fintech services in Sri Lanka that can apply to other developing countries, thereby paving the way for future research in this evolving field. Even factors deemed insignificant in the current context should be monitored, as they may become influential in the future. Collaboration between the public and private sectors is deemed essential to achieve widespread fintech adoption.
Exploring the Credit Risk Management Practices that improve the Living Standard of Micro Loan Borrowers in Micro Finance Sector. With Special Reference to Thawalama Divisional Secretariate in Galle District
(Department of Finance, Faculty of Commerce and Management Studies University of Kelaniya Sri Lanka, 2024) Ransika, K.N.; Piyanada, S.D.P.
Introduction – Purpose of this study is the identify the Credit Risk Management Practices used in Micro Finance Institution for sustainability of Micro Finance sector as well as improve the Living standard of Micro Loan Borrower in Thawalama Divisional Secretariate in Galle district. Methodology - This study takes a qualitative – inductive approach, using semi structured interviews with 20 interviewees in Thawalama Divisional Secretariat in Galle District Findings – This study highlights the Credit Risk Management Practices used in Micro Finance Institution as well as Credit Risk Management Practices that can be used to improve the Living standard of Micro Loan Borrower ( Loans are granted on ability to pay, Compulsory Saving, Only Requiring 2-member guarantees, Insurance the loan, Operating Investment account, Flexible Loan Schedule and Distribution of Dividends) Findings will be discussed by linking to the literature also highlight in the study. Conclusion – Insights derived from the study have the potential to inform policymakers, practitioners, and stakeholders in the Micro Finance sector about strategies that positively impact the socio-economic conditions of borrowers. Furthermore, a nuanced understanding of Credit Risk Management Practices can lead to the formulation of policies that encourage responsible lending, thereby fostering a sustainable and inclusive financial environment. Unlike Previous studies that examined what are Credit Risk Management Practices used to mitigate the Credit Risk for Sustainability of Micro Finance Institution. This study contributes to literature by examining the Credit Risk Management Practices that can be used to improve the Living Standard of Micro Loan Borrowers
The Impact of Integrated Reporting Quality on the Cost of Equity and the Financial Performance: Empirical Evidence from the Diversified Financial Sector in Sri Lanka
(Department of Finance, Faculty of Commerce and Management Studies University of Kelaniya Sri Lanka, 2024) Yapa, L. G. D. D.; Gunasekara, A.L.
Introduction: The aim of this research is to explore the correlation among financial performance, Cost of Equity (Ke), and Integrated Reporting Quality (IRQ) within the context of listed diversified financial institutions in Sri Lanka. Methodology: Employing a quantitative approach grounded in positivism philosophy, this study utilizes a sample spanning from 2013 to 2022. The investigation involves a examination of the annual reports of diversified financial companies listed on the Colombo Stock Exchange to gather the necessary data. Additionally, the study employs panel regression analysis to scrutinize the relationship between IRQ, financial performance metrics, and the cost of equity in Sri Lankan diversified financial institutions. Findings: The statistical analysis, conducted at a 1% significance level, reveals a significant negative correlation between IRQ and Ke. This implies that an increase in integrated reporting quality leads to a reduction in the cost of equity. Positive associations are also identified between IRQ and Return on Assets (ROA) at a 5% significance level and Return on Equity (ROE) at a 1% significance level, validating the reliability of the methodology. Conclusion: These findings contribute to a more comprehensive understanding of how integrated reporting quality can influence the control of the cost of equity and enhance the financial performance of diversified financial institutions in Sri Lanka.
The Impact of Claims Settlement on Financial Performance: Evidence from Listed Insurance Companies in Sri Lanka
(Department of Finance, Faculty of Commerce and Management Studies University of Kelaniya Sri Lanka, 2024) Dilshani, W.S.; Dissanayake, D.M.U.H.
Introduction: Claims settlement is an essential part of an insurance contract because it is critical to both the policyholder and the insurance company. The primary purpose of this study is to empirically investigate the impact of claim settlement on the financial performance of listed insurance companies in Sri Lanka. Methodology: The methodology employed in this study is deductive and quantitative. The study is based on Secondary data from 11 listed insurance companies from 2013 to 2022. The research has employed ROA as the dependent variable, while underwriting profit, net premium, net claims, and derived claim ratio are the independent variables of this study. Data was tested through descriptive analysis, correlation analysis, and regression analysis under STATA software to analyze the data. Findings: The research findings show a significant positive relationship between underwriting profit and financial performance, as well as between net claims and financial performance. However, the results also show a negative relationship between financial performance and net premiums and between the derived claims ratio and financial performance in listed insurance companies in Sri Lanka. Conclusion: The study's findings will be helpful for future academic research and developing a new reporting framework in the context of listed insurance companies 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.
Sustainable Development Goal Reporting: Effect of Institutional and Corporate Governance Factors
(Department of Finance, Faculty of Commerce and Management Studies University of Kelaniya Sri Lanka, 2024) Herath, R.H.M.M.S.; Kethmi, G.A.P.
Introduction: Businesses in today’s context are expected to disclose more on the sustainable development goal reporting within their organization. Although there is an increasing trend in the sustainability reporting disclosure in Sri Lanka, this corporate reporting varies in content and quality, and there is a challenge in incorporating SDG goals in the process of sustainability reporting. The main objective of this study is to examine the extent to external institutional factor influence on content and quality of corporate SDG disclosure and examine the extent of corporate governance factors influence on the content and quality of corporate SDG disclosure. Methodology: Three dependent variables, SDG Acknowledgement, SDG Prioritization and SDG Extent are used while GRI Compliance, Sustainability Assurance CEO Duality and CSR committee are the independent variables. Data of the top 50 listed companies of CSE as at 2023 August are collected for a period from 2021 to 2022. Regression analysis is employed using SPSS to achieve the objective. Findings: According to the results, GRI Compliance, Sustainability Assurance and CSR committee have a significant positive impact on SDG Acknowledgement while the impact of CEO Duality is insignificant. The same results are obtained from the regression model results developed for the SDG Extent. Further, only GRI Compliance and CSR committee have a positive significant on SDG Prioritization while other variables’ impact is insignificant. Conclusion: According to the study SDG reporting practices are developing trends by external institutional factors and corporate governance factors. The study concludes there is a need for more accurate SDG reporting frameworks that support companies to match their business functions and strategies with SDGs.
Communication of Sustainable Development Goals in Social Media and Stakeholder Engagement in Asian Companies
(Department of Finance, Faculty of Commerce and Management Studies University of Kelaniya Sri Lanka, 2024) Samaraweera, H.K.B.C.H.; Kethmi, G.A.P.
Introduction: Stakeholder engagement is one of the crucial factors in enhancing the business and communication between the company and the stakeholders is the most important step in building the relationship. This study investigates the connection between the communication of SDG using social media platforms and the stakeholder engagement rate. The necessity for further investigation into sustainable development goals communication via social media (tweets) and engagement of stakeholders, and characteristics of tweets has driven this study and the main aim to comprehend the relationship between those tweets’ characteristics (communication of Sustainable Development Goals through social media) and stakeholder engagement. Methodology: While the dependent variable is the stakeholder engagement rate, the independent variables are Fluency of the messages, Vividness level, Existence of a link, Content type (Communication of SDGs), The industry type of the firm, and Country of the firm. The study focused on Asian companies with the highest market capitalization, utilizing a sample of 84 firms from 11 countries and eight industries. The sample selection involved companies actively using Twitter and communicating at least one of the 17 Sustainable Development Goals (SDGs) in their tweets. The data collection, spanning from January 1, 2023, to September 31, 2023, resulted in 1728 tweets from the selected firms. The Chi-Square Automatic Interaction Detection (CHAID) is adopted to analyze data. Findings: According to the analysis, identifies tweets about specific countries as the primary predictor of engagement. Notably, tweets about Bangladesh lead to greater stakeholder engagement compared to tweets about other countries. Considerably, the most influential SDGs were identified as Responsible consumption & Products. Incorporating relevant links enhances engagement by providing stakeholders with additional information. The impact of vividness levels, with high vividness posts demonstrating the highest engagement rates. The Information Technology sector has more tweets, indicating that this sector is focusing more on communicating SDGs than other sectors, followed by the FMCG and Financial Services sectors, respectively. China firms focus more on communication of SDGs, as they contribute around 31.1 % of sample countries. Conclusion: As a conclusion, this study contributes valuable insights into the complex landscape of stakeholder engagement for Asian companies in the context of SDGs. The identified factors and recommendations offer practical guidance for companies aiming to enhance their sustainability communication strategies on social media. As businesses navigate the intersection of digital communication and sustainable development, these findings provide a foundation for informed decision-making and strategic planning
An Exploration into People’s Perception and Intention on Using Cryptocurrencies in Sri Lanka
(Department of Finance, Faculty of Commerce and Management Studies University of Kelaniya Sri Lanka, 2024) Jayalath, J.P.K.D.; Samarawickrama, A.J.P.
Introduction: This study delves into the determinants shaping the attitudes and intentions of individuals in Sri Lanka towards cryptocurrencies. The research focuses on four dimensions—Financial Knowledge, Technological Knowledge, Performance Expectancy, and Trustworthiness—utilizing a structured questionnaire administered to a randomly selected sample of 385 individuals from the Colombo District. Methodology: The research methodology involves the random selection of 385 individuals in the Colombo District, with data collected through a meticulously designed structured questionnaire. The study gauges people's attitudes and intentions towards cryptocurrencies based on four key dimensions: Financial Knowledge, Technological Knowledge, Performance Expectancy, and Trustworthiness. The independent variables include Financial Knowledge, Technological Knowledge, Performance Expectancy, and Trustworthiness, while the dependent variable is People's attitude and intention towards cryptocurrencies. Findings: Surprisingly, the study reveals a negative influence of Financial Knowledge on individuals' attitudes and intentions towards cryptocurrencies. However, Technological Knowledge, Performance Expectancy, and Trustworthiness exhibit positive influences on the same. Those who perceive cryptocurrencies as user-friendly, trustworthy, and beneficial are more likely to harbor favorable attitudes and intentions. Conversely, individuals with limited financial expertise may hold less favorable views on cryptocurrencies. The findings underscore the intricate factors influencing people's perceptions of cryptocurrencies in the context of Sri Lanka. Conclusion: This research seeks to establish the relationships between Financial Knowledge, Technological Knowledge, Performance Expectancy, Trustworthiness, and individuals' attitudes and intentions towards cryptocurrencies in Sri Lanka. Despite the unexpected negative impact of Financial Knowledge, the positive influences of Technological Knowledge, Performance Expectancy, and Trustworthiness indicate that perceptions are shaped by beliefs in the utility, simplicity, and trustworthiness of cryptocurrencies. The complexity of these factors is emphasized, shedding light on the nuanced nature of public perceptions regarding cryptocurrencies in Sri Lanka.
Impact of Microloans on Poverty Alleviation Through Samurdhi Program: With Special Reference to Samurdhi Beneficiaries in Madamepella Gn Division in Gampaha District
(Department of Finance, Faculty of Commerce and Management Studies University of Kelaniya Sri Lanka, 2024) Madhushani, K.A.D.; Kethmi, G.A.P.
Introduction: The government of Sri Lanka established the "Samurdhi Programme" in 1995 as a national strategy to combat poverty in accordance with Act No. 30 of the Samurdhi Authority. Despite periodic changes in administration, the basic idea of the Samurdhi initiative has persisted, evolving under several names, and is still in use today. Microloans are widely recognized as a powerful tool for empowering individuals and promoting income-generating activities, ultimately contributing to poverty reduction. This study investigates the effectiveness of the Samurdhi Programme in alleviating poverty in Madamepella GN Division, Gampaha District, Sri Lanka. Methodology: Data is collected from a sample of 256 Samurdhi beneficiary families and the study employs correlation and multiple linear regression analyses to examine the relationships between microloan size, repayment period, and poverty alleviation and to examine the impact of microloan size, and repayment period on poverty alleviation using SPSS. Findings: Correlation analysis revealed significant positive correlations between each independent variable and poverty alleviation (r = 0.599 for loan size and r = 0.435 for repayment period), suggesting that larger loans contribute to greater income generation and poverty reduction. According to the regression model, both loan size and repayment period have a positive and statistically significant impact on poverty alleviation. The adjusted R-squared of the regression model is 0.566, indicating that microloan size and repayment period explain approximately 56% of the variance in poverty alleviation among Samurdhi beneficiaries. Conclusion: These findings suggest that microloans provided through the Samurdhi Program are effective tools for poverty reduction, particularly when combined with appropriate loan sizes and repayment periods. Policymakers and microfinance institutions should have been focusing on giving Samurdhi beneficiaries larger microloans with longer repayment periods. By lowering costs and increasing access to financial services, they should also support financial growth.
The Impact of Integrated Reporting Quality on Cost of Equity and Financial Performance: Evidence from Listed Insurance Companies in Sri Lanka
(Department of Finance, Faculty of Commerce and Management Studies University of Kelaniya Sri Lanka, 2024) Neththasinghe, N.A.S.; Gunasekara, A.L.
Introduction: This research seeks to empirically establish the connection between Integrated Reporting Quality (IRQ) and the financial performance as well as the Cost of Equity (Ke) within the realm of listed insurance companies in Sri Lanka. Methodology: Data for the study was extracted from the annual reports of these listed insurance companies, covering the period from 2013 to 2022. The gathered data underwent analysis using statistical tools to assess Integrated Reporting Quality and financial performance and in relation to the cost of equity. The study employs panel regression analysis to explore the interplay between Integrated Reporting Quality (IRQ), financial performance metrics, and cost of equity within the specific context of Sri Lankan insurance companies. Findings: The findings reveal a statistically significant negative correlation between Integrated Reporting Quality (IRQ) and the cost of equity (Ke) at a 1% significance level. Furthermore, positive relationships are identified between Integrated Reporting Quality (IRQ) and both Return on Assets (ROA) at a 5% significance level and Return on Equity (ROE) at a 1% significance level. Conclusion: The outcomes of the study offer valuable insights into the role of integrated reporting in evaluating the financial performance and cost of equity within the Sri Lankan insurance sector. Future research endeavors could consider to provide a more comprehensive understanding of the subject. The study holds the potential to assist and inspire insurance organizations to adopt robust Integrated Reporting Quality (IRQ) disclosure practices, benefiting policyholders, regulators, and stakeholders by showcasing governance capabilities and disclosure standards.
The Impact of Overconfidence & Loss Aversion on Investment Decision Making of Individual Investors in Colombo Stock Exchange: The Moderating Role of Gender (Special Reference to Central Province)
(Department of Finance, Faculty of Commerce and Management Studies University of Kelaniya Sri Lanka, 2024) Senevirathne, W.M.A.K.; Samarawickrama, A.J.P.
Introduction: Within the framework of Conventional Financial Theory, investors are traditionally perceived as rational decision-makers primarily driven by risk-return considerations. In contrast, Behavioral Finance challenges this notion, positing the presence of irrational investors influenced by a myriad of behavioral and psychological factors. This study seeks to explore the impact of two prevalent behavioral factors, Overconfidence and Loss Aversion, on the decision-making processes of individual investors within the Colombo Stock Exchange. Additionally, the moderating role of Gender in these behavioral dynamics is considered. Methodology: Data for this investigation were collected through a self-administered questionnaire, and the research objectives were primarily analyzed using Correlation analysis and Ordinary Least Square (OLS) regression analysis. The study aims to understand how Overconfidence and Loss Aversion influence investment decision-making, with a specific focus on the moderating role of Gender. Findings: The study findings reveal that Loss Aversion significantly affects the investment decisions of individuals, underscoring its notable impact. However, the influence of Overconfidence on investment decisions is deemed insignificant. Furthermore, the results suggest that Gender independently holds a significant influence on investment decisions and behavioral biases. Interestingly, when Gender is treated as a moderator, its impact on these variables is found to be statistically insignificant. Conclusion: In conclusion, this study contributes to the growing field of Behavioral Finance by shedding light on the influence of Overconfidence and Loss Aversion on the investment decision-making of individual investors within the Colombo Stock Exchange. The significant impact of Loss Aversion underscores the importance of recognizing and understanding behavioral factors in financial decision-making. While Overconfidence appears to have limited influence in this context, the role of Gender in shaping investment decisions and behavioral biases is noteworthy, though its moderating effect is deemed insignificant.
Sustainability Reporting Disclosures and its Impact on Firms’ Financial Performance: Evidence from Banking Industry in Sri Lanka
(Department of Finance, Faculty of Commerce and Management Studies University of Kelaniya Sri Lanka, 2024) Ravishan, P.N.U.; Fernando, J.M.R.
Introduction: In recent years, sustainability reporting has become a common practice of 21st-century businesses. Investor interest in socially responsible investing (SRI) has grown dramatically over the past ten years. Thus, this study aims to examine the effect of sustainability reporting disclosure on the financial performance of banks operating in Sri Lanka. Methodology: Thirteen License Commercial Banks used as the sample for the study covering the period of 2014 to 2022. This study uses deductive approach and quantitative methods to analyze the data. The sustainability disclosures were analyzed under the categories of economic, environmental and social disclosures. Content analysis was used to collect the data on the sustainability disclosures, and the Global Reporting Initiative (GRI) directions were followed to identify the measurements under the economic, environmental and social disclosures. Return on Assets (ROA) and Return on Equity (ROE) are used as the measurements for financial performance. Findings: The study reveals that total disclosure significantly impacts both ROA and ROE and social disclosure also significantly impacts ROA and ROE. However, economic and environmental disclosures show an insignificant impact on both the ROA and ROE in Sri Lanka's banking sector. Conclusion: According to the result social disclosure is the most influencing factor for sustainability reporting practices on the financial performance in the banking industry in Sri Lanka. This means that the commercial banks operating in Sri Lanka pay more attention to sustainability reporting disclosure because of its significant impact on financial performance. Thus, it is crucial that banks prioritize social disclosures over economic and environmental dimensions. This is explained by the fact that social disclosures have a huge impact on the bank's overall financial performance.
The Impact of the Determinants of Financial Soundness on Firm Performance: Evidence from Listed Finance Companies in Sri Lanka
(Department of Finance, Faculty of Commerce and Management Studies University of Kelaniya Sri Lanka, 2024) Pathirana, H.P.S.S.; Gunasekara, A.L.
Introduction: The success and sustainability of finance companies that play a crucial role in the economic development and stability of Sri Lanka rely heavily on their financial soundness, which is measured through indicators such as capital adequacy, asset quality, profitability, and liquidity. However, there is a research gap in understanding the specific impact of financial soundness on LFC’s performance within the context of Sri Lanka. Methodology: This study examines the impact of financial soundness indicators on finance company's ROE and ROA. Study adopts a quantitative research design, utilizing secondary data and panel regression methods. The sample size includes 09 finance companies over a 10-year period (2013-2022) to ensure adequate representation and diversity. Findings: Higher capital adequacy positively influences ROA but not ROE. Effective NPL management consistently boosts both ROA and ROE. Liquidity has no significant impact, while higher profitability consistently improves both ROE and ROA in listed finance companies in Sri Lanka. Conclusion: The insights contribute to understanding the crucial dynamics between financial soundness and performance in the Sri Lankan finance sector, offering valuable implications for policymakers and industry stakeholders.
Impact of Firm Specific Factors on Financial Performance of Diversified Financials in Sri Lanka: Evidence from CSE listed companies under the category of Diversified Financials
(Department of Finance, Faculty of Commerce and Management Studies University of Kelaniya Sri Lanka, 2024) Amunupura, R.N.N.; Samarawickrama, A.J.P.
Introduction: Diversified financial companies play a pivotal role in the financial landscape, offering a broad spectrum of services encompassing lending, insurance, asset management, and investment management. The efficient utilization of resources to generate revenues is a key determinant of financial performance, holding immense significance in the current economic climate. This study aims to investigate the influence of firm-specific factors on the financial performance of diversified financial companies listed within the diversified financial sector of the Colombo Stock Exchange (CSE). The research further endeavors to assess the moderating impact of interest rates on the financial performance of these listed companies in Sri Lanka. Methodology: The research focuses on the top 20 profitable financial companies selected from the pool of 42 listed diversified companies on the CSE. The study employs multiple regression analysis in STATA 17 to examine eight hypotheses relating to firm-specific factors and the moderating impact of interest rates on financial performance. Findings: The study's overall results indicate significant impacts between firm-specific factors and the financial performance of diversified financial companies listed in the CSE. These firm-specific factors are essential contributors to the observed financial outcomes. Moreover, a noteworthy finding is the substantial impact of interest rates on the financial performance of these diversified financial entities. The research highlights the intricate relationships between these factors and financial performance. Conclusion: In conclusion, this study provides valuable insights into the dynamics governing the financial performance of diversified financial companies in the CSE. Firm-specific factors emerge as influential contributors to financial outcomes, emphasizing the need for strategic management of these factors. Additionally, the study underscores the significant moderating impact of interest rates on the financial performance of diversified financial companies, further illustrating the multifaceted nature of their financial dynamics.
The Impact of Credit Risk on Financial Performance of Listed Licensed Commercial Banks in Sri Lanka
(Department of Finance, Faculty of Commerce and Management Studies University of Kelaniya Sri Lanka, 2024) Premarathna, S.T.M.; Piyananda, S.D.P.
Purpose: Based on the current crisis in Sri Lanka credit risk appears to be the biggest threat to banks. The substantial portion of non-performing loans on the bank's balance sheet affects its performance and reduces its profitability. This paper aims to analyze the impact of credit risk on the financial performance of listed commercial banks in Sri Lanka. Methodology: The secondary data from 10 commercial banks in Sri Lanka were collected for the sample period of 2013-2022 referring to their annual reports. Return on Asset (ROA) and Return on Equity (ROE) were used as proxies for financial performance indicators while Non-Performing Loans (NPLs), Capital Adequacy Ratio (CAR), and Loan Loss Provision (LLP) were used as credit risk indicators. The study employed descriptive statistics, panel regression analysis, and correlation analysis for data analysis. Findings: The study shows that non-performing loans (NPLs) demonstrated a significant impact on ROA and ROE. Conclusion: The practical implications of the study suggest that banks should aim to maintain adequate capital reserves, implement effective risk management strategies, consider firm size, monitor financial leverage, and engage in continuous research and regulatory compliance. To thrive in a dynamic financial landscape, commercial banks should stay updated on the latest research and industry best practices.
Factors and Challenges Affecting the Success of Women Entrepreneurship; A Study in Salon Industry in Kurunegala District of Sri Lanka
(Department of Finance, Faculty of Commerce and Management Studies University of Kelaniya Sri Lanka, 2024) Dissanayake, D.M.K.L.; Abeysekera, R.
Introduction: Women’s entrepreneurship in Sri Lanka grapples with persistent challenges, stemming from intertwined issues that have impeded historical progress. This study aimed to discover the factors and challenges faced by women entrepreneurs in the salon industry in the Kurunegala district. Methodology: Qualitative methods were used to collect data from interviews with women entrepreneurs in the salon industry. The findings show that a significant obstacle is the limited financial capability of women entrepreneurs, constraining their capacity to invest, expand, and compete effectively. Findings: Insufficient governmental and regulatory frameworks exacerbate these challenges, as a lack of robust support structures hampers the growth and sustainability of women-led enterprises. The need for more reliable evidence and data is a key contributing factor to these impediments. The absence of comprehensive information, often influenced by societal rules and customs, complicates the development of targeted policies and initiatives addressing the specific needs of women entrepreneurs. More accurate data is needed to ensure the formulation of informed strategies to uplift and empower women in business. The nation's status further compounds the challenges women entrepreneurs face in Sri Lanka as a developing country. Women managing small and medium-sized enterprises (SMEs) confront a complex interplay of financial constraints, regulatory limitations, and a need for more reliable data. This underscores the urgent need for comprehensive and tailored interventions to address these unique challenges. Conclusion: Bolstering women's entrepreneurship in Sri Lanka requires initiatives encompassing targeted financial support, reforms in governmental and regulatory frameworks, and the generation of reliable data reflecting diverse rules and customs in business environments. By addressing these challenges directly, Sri Lanka can create an environment conducive to the success and sustainability of women-led businesses, contributing to individual economic empowerment and broader societal development.
The Impact of Corporate Governance on Firms’ Financial Performance: Evidence from Listed Finance Companies in Sri Lanka
(Department of Finance, Faculty of Commerce and Management Studies University of Kelaniya Sri Lanka, 2024) Kaushalya, A.K.G.D.; Piyananda, S.D.P.
Introduction: Corporate governance is a widely regarded core organizational concept that is crucial for the development, sustainability, and competitiveness of businesses. Strong business ethics, sensible policies and processes, and effective monitoring systems are thus regarded as elements of a system of competent corporate governance. The main objective of this study was to investigate the impact of Corporate Governance on the financial performance of listed finance companies in Sri Lanka. Methodology: Return on Assets (ROA) and Return on Equity (ROE) were used as proxies for firms performance whereas explanatory variables include Board Size, Board Composition, Audit Committee Size, Goard Gender. The sample picked out 20 listed finance companies based on companies with the highest market capitalization in financial statements as of 31st August 2023. The secondary data were collected through the annual report in these listed finance firms. Secondary data were collected using documentary information from the Company's annual report for the period 2018 to 2022. Data analysis was conducted using techniques such as, panel regression, descriptive analysis, and correlation analysis. Findings: Looking at the overall correlations suggests that factors such as board size, board meetings, board gender, and firm size have more positive impacts on ROA and ROE. And board composition has negative impacts on return on assets. But overall, these variables are not significant impact on ROA and ROE. Understanding the corporate governance mechanisms on financial performance is an important area of interest to academics, practitioners, and regulators. Conclusion: The empirical result of the study shows that all the CG variables (board size, board independence, and board gender) have positive and insignificant impacts on financial performance at 5% level of significance with the following, respectively. This suggests that board size is essential to achieving board effectiveness and increased firm performance, which is consistent with the findings of earlier studies. This finding is supported with the previous empirical finding of Mohammed Ibrahim and Buhari Baba (2019) who found positive association between board size, board independence, and board gender and firm performance.
The Impact of Integrated Reporting Quality on the Financial Performance of Listed Insurance Companies in Sri Lanka
(Department of Finance, Faculty of Commerce and Management Studies University of Kelaniya Sri Lanka, 2024) Yamasinghe, A.S.; Piayananda, S.D.P.
Introduction: Integrated reporting quality (IRQ) is an emerging concept followed by organizations globally. The purpose of the study is to determine the impact of IRQ on the financial performance of Insurance Companies in Sri Lanka. Methodology: This study considers 11 Insurance companies listed on the Colombo Stock Exchange (CSE) for the period from 2013 to 2022 as the sample. In this regard, secondary data was collected using annual reports. IRQ was employed as an independent variable in this study, with financial performance as the dependent variable. The data is analyzed using descriptive statistics, correlation analysis, and panel regression analysis using return on assets and return on equity as proxies. Data analysis was conducted using STATA statistical software. Findings: According to the study found that there is no significant relationship between IRQ and the financial performance of insurance companies in Sri Lanka. Independent variables are not correlated with each other, as per the results of the inter-correlation matrix and VIF values. According to Hausman's test random effect model was selected to assess both return on equity and return on assets. The results of the random effect model regression analysis show that IRQ and growth opportunity does not have impact on ROA. Further, IRQ, and Mtb have an insignificant positive impact on ROE at 5% significance level. Conclusion: The results of this study will help regulators apply IIRF in the Sri Lankan setting and prepare annual reports. The results have ramifications for policy makers and those who produce annual reports because investor relations significantly affects both market and financial performance.
Impact of Cryptocurrency on the Stock Market Performance in Sri Lanka: An Empirical Study Based on Ripple (Xrp)
(Department of Finance, Faculty of Commerce and Management Studies University of Kelaniya Sri Lanka, 2024) Subasinghe, S.A.D.S.; Weerasinghe, W.D.J.D.
Introduction: In the global financial markets, cryptocurrency has secured a distinct position, especially after its rapid growth and expansion. In recent times, numerous scholars have investigated the relationship between cryptocurrencies and the stock markets in different regions. Over the past three years, Sri Lanka's journey toward recovery from the global pandemic and economic crisis has opened the doors to cryptocurrency, with a growing trend of using it as an alternative investment. This study investigated the impact of cryptocurrency on the stock market performance in Sri Lanka, with a specific focus on XRP (Ripple). Methodology: The analysis uses the data of XRP price returns, XRP volume, and ASPI returns, as well as S&P SL20 returns for the period 2013-2023. The analytical methods involve time series data regression techniques using E-Views software. The GARCH (1,1) model is employed methodology to evaluate the impact of cryptocurrency on stock market performance in Sri Lanka. Findings: The results suggest that there is a weak positive relationship between XRP returns and both ASPI returns and S&P SL20 returns. Additionally, ASPI returns, and S&P SL20 returns are not statistically significant indicating that there is no impact of XRP on stock market performance in Sri Lanka. Conclusion: The research serves as a basis for policy decisions for regulators, investors, and academics regarding the cryptocurrency market. Furthermore, future studies should consider a wider range of cryptocurrencies and explore the impact of Bitcoin Futures to gain a deeper understanding of the connections between cryptocurrencies and stock indices.