Finance

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The use of quality assurance assessment grading for performance evaluation of public universities in Sri Lanka
(Sri Lanka Association for the Advancement of Science, 2011) Weligamage, S.
Quality assurance rating systems can help parents and students to make informed choices regarding university selection. The existing evaluation procedure for academic programmes in Sri Lanka is based on peer reviewers’ judgments on eight selected aspects and the outcome is revealed based on a three level ordinal scale, as Unsatisfactory (C), Satisfactory (B) and Good (A). However, there is no formal method for calculating an overall programme performance indicator within the quality assurance (QA) process in Sri Lanka. The purpose of this study is to assess the applicability and use of quality assurance grading for performance ranking of public universities in Sri Lanka. Secondary data for programme grading in ten selected universities were obtained from the Sri Lankan Quality Assurance and Accreditation Council. Data for faculties of science, agriculture, humanities, social science and management were available. Twenty four total credit values were assigned to eight aspects that are currently used in programme evaluation depending on the relevance of the given evaluation aspects in monitoring programme performance. Three values were assigned for the grading and a formula was developed to calculate the final programme score as the Average Program Performance Index (APPI). Descriptive, regression analysis and ANOVA were used to compare and identify the performance score and the deviation across faculties and universities. Findings revealed that APPI ranges between 2.7 and 3.8. Similar results are observed when considering the specific quality aspects of the programme. This indicates that the performance scores are different within the faculties in the sample selected. However, this GPA difference varied among faculties. While significant deviations in programme performance exist in the faculties of science and management, such deviations are not observed in faculties of agriculture and arts. Results from the regression analysis proved that performance among universities are also different. The study concluded that the reviewers judgmental grading can be used as identifying the performance differences and the best performer among faculties in the public funded universities using the proposed model for programme performance calculation. Findings of this study can be used to identify the highest performer and that can be used as the baseline to compare the performance between universities.
Management faculty members’ satisfaction on academic support in Sri Lankan public universities
(Sri Lanka Association for the Advancement of Science, 2013) Weligamage, S.S.
A Case Study Review of Strategic Acquisitions of Synergic PLC
(Staff Development Unit, Faculty of Commerce & Management Studies, University of Kelaniya, 2015) Morawakage, P.S.; Kulathunga, K.M.K.N.S.; Basnayake, W.B.M.D.; Wijesinghe, M.R.P.; Chandrasena, S.M.; Piyananda, S.D.P.
Synergic Holding PLC initiated operations in 1991 as a software development company. It was incorporated as a private limited company in 1998 and obtained a listing in the Colombo Stock Exchange in June 2011. Soon after the incorporation they became the sole authorized distributor for DELL Computers in Sri Lanka. Gerrys Synergic (Pvt) Ltd started as a joint venture with Gerrys Holdings (Pvt) Ltd in Pakistan, fulfilling Mr. Alok Pathirathne’s (the founder of Synergic Holdings PLC) dream of ‘going global’. Synergic Company’s move towards furniture retail, from IT related activities was the first instance they adopted the diversification strategy. At present the Synergic Holding PLC is rated as one of Sri Lanka’s most energetic and aggressive conglomerates. The diversified key sectors are Information and Communication Technology, Healthcare, Retail, Financial Services, Automobiles and Leisure. This case study specifically underlines the strategic acquisition of Rovel PLC which took place in the year 2014. Rovel PLC initiated its operations in 1989, in a small retail outlet. Today, Rovel’s flagship department store is a 36,000 square foot, lavishly appointed store and it owns 20 other outlets in many strategically important locations. Rovel operates at the top end of the retail fashion market, where it has carved out a niche through a highly focused approach targeted at the upper-middle and higher-income groups, Rovel has maintained its leadership position by providing a modern, world-class retail environment that has become the standard for the South Asian region. Rovel is not only Sri Lanka’s leading fashion brand, but with a wide array of products, it is also Sri Lanka’s only genuine department store. Rovel has achieved the status of an iconic brand with its tireless ability to reinvent itself at regular intervals. The recent acquisition of Rovel PLC by Synergic Holdings has created a major upheaval amongst the business community and the media. One main intention behind the said acquisition was Synergic’s motive of working with Parkson, the largest shareholder of Rovel. However the withdrawal of Parkson from Rovel PLC left Synergic’s efforts futile. Also after the said acquisition, Synergic’s excessive borrowings have resulted with its Fitch Rating being downgraded by two notches. The boards of directors now are contemplating about the survival of the company with its existing structure.
Volatility Modeling and its Impact on Risk premium in Emerging markets
(2015) Morawakage, P.S.
This study examines different volatility models to capture the stock market volatility in two emerging markets Indonesia and Sri Lanka. Further the relationship between volatility and risk premium in both markets are analyzed to test the risk return trade off in those markets. GARCH, EGARCH and TGARCH models are used to capture the volatility and GARCH-M model is used to analyze the risk return relationship. In both markets it is observed that volatility clustering, leverage effect and nonlinear effect are significant by considering daily ASPI return observations from 2004 to 2013. Relationship between volatility and risk premium is not significant according to the GARCH-M model.
Valuing human capital in Sri Lanka: Prospects and challenges
(Sri Lanka Association for the Advancement of Science, 2015) Weligamage, S.S.
Concepts and Implications of Theory of Co-production
(Faculty of Management & Finance University of Colombo, 2015) Abeysekera, Ruwan
The purpose of this paper is to present the concepts of co-production discussed in previous literature and to discuss its implications on research and practice. This is a theoretical paper. It identifies that the extant literature in co-production presents a number of research gaps that can be addressed in future research. These gaps exist in the areas of collective co-production, dyadic relationships and contextual factors. Moreover, the practicing managers and the policy makers can also use co-production concepts identified in this paper to implement in their programmes which offer diverse benefits to the programmes and the clients.
The use of students’ feedback indicator in programme quality assessment in Sri Lankan universities
(Sri Lanka Association for the Advancement of Science, 2015) Weligamage, S.S.
A case study on modern supply chain management practices
(Naval and Maritime Academy, Naval Base, Trincomalee, Sri Lanka, 2016) Morawakage, P.S.; Perera, A.S.
Do Investors in Green Bond Market Pay a Risk Premium? Global Evidence
(2018) Nanayakkara, Madurika; Colombage, Sisira
• We examine the pricing difference of Green Bonds (GB) and conventional bonds (CBs) in capital markets worldwide. Credit spread is used to observe if investors would like to pay a premium over par for GBs or CBs. This study uses panel data regression with hybrid model to analyse daily observations over the period from 2016 to 2017. We employ Option-Adjusted spread (OAS) to measure the credit spreads of bonds while controlling for bond specific, macroeconomic and global factors which influence the spread. With the hybrid model used in the panel data analysis, we were able to capture the fixed effects of variables in a random effect model. We find that GBs are traded at a premium of 63 basis points as against a comparable corporate bond issue. We find that the green label provides issuer an incentive to raise funds through issuing GBs while providing investors an opportunity to diversify their investments returns. Our findings provide several implications to the major players driving green bonds market in order to scale up the market to finance the required level of worldwide green investment needs. We stress an urgent need to support the growth of green bond market to achieve sustainable development through mitigating climate change challenges.
Default risk and debt recovery strategies in microfinance: evidence from Sri Lankan microfinance sector
(the Department of Accountancy, Wayamba University of Sri Lanka, 2018) Kalpani, B.L. Wathsala; Abeysekera, Ruwan
Microfinance Institutions (MFIs) contribute immensely to low income earning individuals by providing microcredit and other services such as insurance, savings and training to engage in income generating activities. Microfinance spurs entrepreneurship, alleviates poverty and empowers women. Since MFIs provide microcredit to low income earning individuals who cannot provide collateral, there is a significant risk involved in lending. Hence, MFIs need to have good recovery strategies to maintain better loan portfolios. Thus, the objective of this study is to examine the default risk and debt recovery strategies adopted by Sri Lankan MFIs. Multiple case study method was used in this study as the research method and data was gathered using in depth interviews. Findings show that taking preventive actions such as quality screening, following up and critical monitoring, enhancing social capital, field officer portfolio tracking, providing Business Development Services (BDS), and using effective incentive systems can reduce the default risk. The debt recovery strategies identified by the present study are promise register, reminder letters, deductions form savings and guarantor’s income, and legal actions that could reduce the arrears in the status of default. The findings of this study contribute to both the epistemological and practical domains.
Corporate governance and default prediction: a reality test
(Applied Economics, 2019) Fernando, J.M.R.; Li, Leon; Hou, Yang (Greg)
Default prediction has commanded the attention of researchers for at least 50 years. This paper addresses several testable hypotheses regarding the relations between corporate governance and default prediction. We employ the conventional logistic regression to provide empirical evidence from U.S. default data over the period of 2000 to 2015. Empirical results are consistent with the following notions: First, default firms are associated with high ownership concentration, low shareholder rights, low financial transparency and disclosures, and less board effectiveness. Second, in-sample and out-of-sample tests support the incremental contribution of corporate governance information on default prediction, when compared with the models involving just financial information.
Business development services (bds) offered by microfinance institutions (mfis) in sri lanka: case study as a research strategy
(Open University of Sri Lanka, 2019) Abeysekera, R.
Research methodology refers to an overall approach to a problem, which can be put into practice in a research process; from the theoretical underpinning, to the collection and analysis of the data. Research methodology consists of components such as research philosophy, process, strategy, choice and techniques. Strategy provides overall direction including the process to conduct a research. Case studies, experiments, action research and ethnography are strategies that can be used in a research. A case study is an empirical inquiry that investigates a contemporary phenomenon in depth and within its real life context, especially when the boundaries between the phenomenon and its context are not clearly evident. Choosing the correct research strategy is very important for a doctoral study. Thus, Case study method was used for a doctoral study to explore the business development services (BDS) offered by the Sri Lankan Microfinance Institutions through the lenses of coproduction concept. Case study method addresses the research objectives and questions at hand and improves the reliability of the research process. Further case study method contributes to understand the complex relationships in BDS and addresses the call for improved methodological pluralism in BDS research.
Social entrepreneurship: concepts and research areas
(Open University of Sri Lanka, 2019) Abeysekera, Ruwan
Social entrepreneurship is an emerging phenomenon that provides innovative solutions to persisting social problems such as poverty, lack of access to education, clean drinking water and human rights which were previously overlooked by businesses, governments and non-governmental organizations. The concept of social entrepreneurship has not been defined properly, and hence, is a contested concept. Further, given that it consists of many sub-concepts, it is defined as a cluster concept. Social enterprises engage in social entrepreneurship and they try to achieve sustainability by using business models. Being a new discipline, social entrepreneurship presents many opportunities in research. This paper discusses the important concepts in social entrepreneurship and potential research areas for prospective researchers.
Co-Production Related To Business Counselling in the Microfinance Sector as a Demonstration of Social Cooperation: An Interpersonal Relationship Approach
(2020) Abeysekera, Ruwan
Microfinance Institutions (MFIs) provide services such as microcredit, savings, insurance and Business Development Services (BDS) to low income people in order to start new businesses and expand existing businesses. MFIs cater to micro enterprises. A microenterprise is defined as an owner-managed business that has fewer than 10 employees. The studies show that micro enterprises not only need micro credit, but also BDS in order to grow their businesses. This study focuses on BDS. BDS are non-financial services such as management training, vocational training skills, marketing assistance and technology access provided to owner managers by MFIs. MFIs could provide BDS to owner managers/clients using business counselling. A good relationship between the counsellor and the client can be considered a defining feature of any successful counselling intervention. This interpersonal relationship enhances co-production of BDS in counselling. Therein, the objectives of this study are; to identify the factors that enhance the interpersonal relationship between the counsellor and the client in microfinance settings that result in enhanced co-production, to identify how interpersonal relationships enhance co-production, and to understand how organisational factors affect interpersonal relationships. The multiple case study method was used to conduct the study and six (6) Sri Lankan Microfinance Institutions (MFIs) were chosen as cases and data was collected by holding in depth interviews. Findings show that factors such as the expertise of the counsellors, social interaction, similar attitudes, intensity of contacts, and power distance influence the relationship between the counsellors and the clients. As a result of the enhanced interpersonal relationships between counsellor and client, parties exchange personal and communal favours thereby further enhancing co-production as well as improving the provision of information by clients. The findings further reveal that interpersonal relationships could be affected by the organisational factors such as the type of MFI and type of linkages. Therefore, the findings of this study will enable MFIs to improve the counselling intervention and will further contribute to the microfinance knowledge and practice domains.
The Nexus between Co-production and Willingness: Business Counselling in the Microfinance Sector
(2020) Abeysekera, Ruwan
Microfinance plays a vital role to alleviate poverty through the development of micro enterprises. Microfinance Institutions (MFIs) provide services such as micro credit, savings, insurance, and business development services (BDS) to its clients. BDS are non-financial services such as business training, market linkages, and information services which are provided by Microfinance Institutions (MFIs) to its clients. BDS help owner managers improve sales and profits and enable MFIs to achieve higher loan repayment rates and higher potential for client retention. The counsellors of MFIs provide BDS to owner managers of micro enterprises. This study focuses on the co-production of BDS where a counsellor of MFI and the owner manager of a microenterprise engage in the co-production of services. For a successful co-production, the client (i.e. owner manager in this study) has to a play an active role by exercising three client factors, namely ability, clarity of the role, and motivation. Thus, the objective of this study is to explore how the client/owner manager motivation (i.e. willingness) affects the co-production of BDS in counselling within a microfinance setting. A multiple case study method was used to conduct the present study by choosing six Sri Lankan MFIs as cases, where the selection of cases and respondents was based on a purposive sampling method. A counsellor and an owner manager representing each MFI were interviewed for data collection and thematic analysis was used to analyse the data. The findings show that economic factors, sanctions, and contextual factors influence the willingness of owner managers to co-produce BDS with counsellors of microfinance institutions (MFIs). The findings contribute to knowledge and practice domains related to microfinance.
Trainer expertise in business training: evidence from the sri lankan microfinance institutions
(2020) Abeysekera, Ruwan
Microfinance Institutions (MFIs) provide business training to its clients in order to improve their knowledge and skills so that they can manage their businesses effectively and efficiently. MFIs can also experience better loan repayment rates due to the provision of business training. Thus, business training is important to both MFIs and clients. To deliver business training successfully, the expertise of the trainers matters significantly. Hence, the objectives of this study are to define the expertise, to identify how expertise could help clients in their business ventures, and to identify strategies used by trainers to transfer their expertise. The case study method was used to carry out this study and six Sri Lankan MFIs were used as cases. One manager, one trainer, and one owner manager/client from each MFI were selected for interviews and hence, 18 in depth interviews were conducted to gather data. The findings reveal that the trainers’ expertise consists of business knowledge and experiential knowledge. Trainers use business knowledge to provide subject knowledge such as financial literacy and business plan preparation. Experiential knowledge is used to create networking opportunities and to provide subject knowledge as well. Further, the trainers use strategies such as interactive training and communication to transfer the expertise. The findings of this study would be useful to microfinance practitioners, policy makers, and it further contributes to the knowledge domain of microfinance.
Exploring Factors Affecting the Effectiveness of Business Training in the Microfinance Sector: Using the Industrial Marketing Purchasing (IMP) Approach
(2020) Abeysekera, Ruwan
Microfinance institutions provide business training to its clients/owner managers to start and expand businesses. The literature reveals that business training given by MFIs helps improve the performance of both the MFIs and its clients (i.e., Owner managers of microenterprises). In effect, due to business training, MFIs can have improved loan repayment rates, client retention, and client satisfaction, while the owner-managers can have better sales, profits, and skills. However, despite the importance of business training to both MFIs and owner-managers' performance, there is a dearth of research undertaken to explore the effectiveness of business training intervention in microfinance setting. In this study, effectiveness is defined in terms of the impact of business training on the performance of MFIs and owner-managers (i.e., training – performance dyad). Hence, the purpose of this exploratory study is to examine the factors affecting the effectiveness of business training given by the MFIs in Sri Lanka. A multiple case study method was used to carry out the study. The study was guided by the Industrial Marketing Purchasing (IMP) group framework. Thus, the study looks at how operating environment, atmosphere, interacting parties and the interaction process affect the effectiveness of the training intervention. The findings reveal that lack of money and low client demand for the operating environment influence training effectiveness. Further, it was identified that factors such as better loan repayment and new venture creation motivate the MFIs to provide business training, whereas better business knowledge and business performance motivate the owner-managers to receive business training. These motivators are part of the atmosphere that has a bearing on the effectiveness of business training. The findings further show that the characteristics of the interacting parties (i.e., trainers and trainees in this study) could affect business training effectiveness. Thus, the trainer's expertise, trainer being internal or external, and trainer being full time or part-time can influence the training-performance dyad. Further, the owner-managers' expertise and organizational structure could also affect the effectiveness of training. Several factors enhance the interaction between trainers and owner-managers. They are the trainer's expertise and the owner-manager/client, trainer readiness, communication, follow-up procedures, feedback, and owner manager's willingness. Further, location, duration of the training, charging a fee or not, the voluntary/compulsory nature of training, and the provision of subsidies also could enhance the interaction between the trainers and the owner-managers. Therein, this study contributes to the knowledge domain of microfinance. The findings are useful to practitioners and policymakers in microfinance as they can look at the IMP framework to identify factors that could enhance the business training-performance dyad. In this study, the client and the owner-manager are used interchangeably.
Examining Counsellor Expertise: Evidence from the Sri Lankan Microfinance Sector
(2020) Abeysekera, Ruwan
Posited in the context of the exacerbating conditions of the economic crisis, the shortage of financial resources in the small and medium-sized enterprise market, and the low standard of living of the population in a number of countries, microfinancing is one of the effective tools to stimulate entrepreneurship. Microfinancing is the issuance of small loans and other services, such as business development services (BDS), which also comprise components of financial literacy, business registration, market linkages, thereby serving as a reliable mechanism to support low-income individuals to start and grow their businesses and to alleviate poverty in the country. Microfinance Institutions (MFIs) use innovative techniques, such as group lending and gradually increasing loan sizes in order to provide these services. The systematic analysis of the existing scientific literature on microfinance revealed the lack of comprehensive research on the significance of counsellor expertise in the provision of BDS. Thus, the objectives of the present study were to understand the meaning of counsellor expertise, to see how counsellor expertise could help owner-managers in different areas of their businesses, and to examine how the organizational factors affect the expertise of the counsellors. A case study method was used to carry out the study. Accordingly, six MFIs were selected as cases, and a microfinance manager, a counsellor, and three owner-managers/clients from each MFI were interviewed to collect the data. The findings show that the counsellor expertise is twofold: business knowledge and experiential knowledge. It was evidenced that, while the business knowledge of counsellors helps owner-managers in record keeping, business plan preparation, and financial literacy, the experiential knowledge helps owner-managers in networking, business linkages, and different industries. The findings also reveal that the type of MFI, the type of linkage, and counsellor selection method influence the expertise of the counsellors. Therein, the findings are useful both to the practice and the knowledge domains in microfinance setting.
Co-production in BDS: The evidence from the Sri Lankan Microfinance Sector
(2020) Abeysekera, Ruwan
Microfinance Institutions (MFIs), in addition to the provision of microcredit, also provide business development services (BDS) to owner managers in order to develop micro enterprises. BDS are non-financial services such as business training and access to information that help owner managers of microenterprises to develop businesses. In this respect, counsellors and trainers in MFIs co-produce BDS with owner managers. Co-production is the joint efforts of two parties, who together determine the output of their collaboration. The objective of this study therefore is to examine how co-production works in a BDS setting. A multiple case study method was used to carry out the study. Six MFIs were selected as cases and in-depth interviews were held with counsellors, trainers and managers to collect the data. The findings reveal that the expertise of counsellors, trainers and owner managers are the inputs for co-production. The outputs of co-production are twofold: MFI specific outputs and owner manager specific outputs. While MFI specific outputs are identified in better loan repayments rates, enhanced client satisfaction, and increased client retention, the owner manager specific outputs are denoted by better business knowledge, better sales, and profits. MFIs use counselling and training as modalities to co-produce BDS. There are a number of factors that affect the variability in coproduction including the readiness of counsellors and trainers, with a number of BDS provided under each modality. Therein, the findings of this study are beneficial to microfinance practitioners and policy makers. Furthermore, the findings also contribute to the knowledge domain of microfinance.
Systematic review of the market wide herding behavior in Asian region
(2022) Chathurika, H.L.D.J.; Tennekoon, S.T.M.S.
Traditional Finance theory presumed that equity market participants take decisions based on rationality. However, recent market incidents witnessed investors decision-making process is fueled with irrational behaviors like herding. Herd behavior is a dominated behavioral bias which depict investors take decisions based on imitating other investors behavior. Numerous studies can be identified in Herding based literacy in developed, emerging and frontier markets around the world. Thus,this study attempts to provide a review of theory and empirical evidence on market wide herding behavior in Asian region. As per the findings of the study, it can be observed that in India majority of studies have confirmed the non-existence of herding behavior. Half of the studies conducted in Pakistan confirm the existence of herding behavior while remainder confirm non-existence of herding behavior. Similar results were observed in Sri Lanka as well. However, majority of studies in Taiwan and Indonesia and all the studies of Vietnam have provided results for the existence of herding behavior. Thereby this study identifies several open issues for future research. Future studies that deal with time-series price data could employ empirical methodologies that allow for time-variation in parameter values. It is also important to know whether it is the same investors that herd over time, and why: are the reasons behind herding the same over time? Further, qualitative research needs to be conducted to identify the reasons behind the investor herding behavior.