2nd ICARE Student's Conference - 2016

Permanent URI for this collectionhttp://repository.kln.ac.lk/handle/123456789/16423

Browse

Now showing 1 - 20 of 87

Accountants’ Perception of Internal Control Problems Associated with the Use of Computerized Accounting Systems: Evidence from Sri Lanka
(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2016) Wijesuriya, D.R.D.; Perera, H.A.P.L.
Today most of companies depend upon the computerized accounting systems and these systems have more complex in meeting information needs. Due to the enhancement of business complexity in recent decades, companies are facing internal control problems associated with the use of computers and computer related systems. The main purpose of this study is to examine the accountants’ perception of internal control problems associated with the use of computerized accounting systems exist. For this study, the main instrument of data collection was the questionnaire. Data is collected from 84 accountants in selected companies covering different types of industries and Descriptive statistics such as frequency distributions, percentage distribution of responses, means, cross tabulation and ANOVA were used to analyze the data. The results indicate that there are internal control problems exist with the use of computerized accounting system in Sri Lankan companies. The major important problems are Unfamiliar user may enter incorrect data, Great potential for error by employees as a result of insufficient knowledge about the system ,Great speed of computers can be manipulated to the advantage of users, New sources and potential for errors are likely to arise in the: Hardware and software, Duties are concentrated within the computer (i.e. no separation of duties as in the manual system), Information can be changed without physical traces, concentrated information is easy to steal and Electronic information is easy to lose, Employees, customers and other users trust the computer output .However, they perceive that certain control procedures can be undertaken to overcome them such as authorized access to computers, Proper system design, Use physical controls and proper authorization, Use backup copies, only authorized people should have access to the records, Use physical control and cross-check and Use control totals to check computer results .It was found that the problems in the storage level are most frequently occurred internal control issues.
Accounting Based Performance Measures and Shareholder Value Creation: Evidence from Listed Companies in Colombo Stock Exchange
(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2016) Iroshani, M.B.M.; Rajapakse, R.M.A.D.P.
Rapid growth of investments in the market has led the “Shareholder Value Creation” being one of the most important and popular concept all over the world. Since the companies were highly attracted for creating shareholder value, the concept has become a critical component. Traditional Accounting Based Performance Measures were critiqued for reporting a low level correlation with shareholder value creation. Thus this study examines the relationship between Accounting Based Performance Measures and Shareholder Value Creation for selected Beverage, Food and Tobacco companies listed in Colombo Stock Exchange. Nineteen companies from the sector were selected as the sample for the study. Audited annual reports for 6 years from 2010 to 2015 were analyzed to collect data needed for the study. Market Value Added (MVA) was used as the proxy to Shareholder Value Creation Measures and Return on Equity (ROE), Earnings per Share (EPS) and Return on Assets were used as the Accounting Based Performance Measures. Simple Regression and Multiple Regressions were used to test specified four research objectives. Other than those methods Descriptive Statistics and Correlation analysis have been done. The research findings suggested that there was no strong significant relationship between Accounting Based Performance Measures and Shareholder Value Creation. In conclusion it is recommended to consider contemporary economic measures when making an investment rather than only considering the Accounting Based Performance Measures.
Adoption of Information Technology to Productivity of Sri Lankan Banking Industry
(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2016) Fernando, W.K.B.A.P.; Thilakarathne, C.R.
In the current context, the information technology has become one of the crucial elements in economic development and a backbone of knowledgebased economies in terms of operations, quality delivery of services and productivity of services. Information technology can improve bank performance in two ways: IT can reduce operational cost, and facilitate transactions among customers within the same network. Therefore, for a developing country like Sri Lanka, taking advantage of information technologies has become an increasing challenge. Since banks are spending increasing amounts of capital on information technology, it is very important to understand the relationship between information technology investment and bank productivity. Hence, regression model and the correlation technique are used to analyze the relationship between information technology and productivity. This paper presents the adoption of information technology to productivity in the banking industries in Sri Lanka and gives an insight into how productivity of banking has been enhanced via IT. The results are tested on a panel of 10 Sri Lankan banks over 6 years, during the period of 2009- 2014. From the analysis it was reviewed that the bank profits increment due to adoption of IT investment, reflecting positive network effects in this industry.
An Analysis of Capital Structure and Its Impact on Performance: with Reference to Financial Institutions in Sri Lanka
(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2016) Balendra, V.; Madurapperuma, M.W.
The capital structure of a firm is basically a combination of debt capital and equity capital. Which is deemed as appropriate to enhance its operations. A lot of investigations are being done on the implications of capital structure’s selection on organization’s value and its performance since the seminal work of Modigliani and Miller (1958). A wee little is empirically known about such implications in emerging economies such Sri Lanka. The purpose of this research is to explore empirically the impact of capital structure decisions on the financial sector organizations’ financial performance in Sri Lanka as one of emerging economies. Regression analysis is used in this research to identify the relationship between the leverage level and the performance of the financial institutions. Broad data covering the six year periods from 2009- 2015 of financial institutions in Sri Lanka are gathered and analyzed with the regression analysis. The data all are quantitative in nature and already available on Colombo stock exchange database (secondary evidence). There are sixty Financial Institutions in Sri Lanka and most of them are levered firms. Based on Return on Equity financial performance measurement and financial institutions’ leverage level the results revealed that leverage level has a weak level of negative impact and whilst controlling variable total assets has strong negative impact on organization’s financial performance.
Analysis of Human Resource Outsourcing Services in Sri Lanka
(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2016) Rezana, N.F.; Rathnasiri, U.A.H.A.
Human Resource Outsourcing is a process in which the human resource activities of an organization are outsourced so as to concentrate on the organization`s core competencies. Also HR functions are complex and time consuming that it will create difficulty in managing other important areas. By HR outsourcing, this problem can be reduced which will improve effectiveness by focusing on what the organization is best at. It will also improve the flexibility of the organization to the fast changing business needs. The purpose of this study is to examine current and prospective HR outsourcing trends in Sri Lanka considering the factors underlined by an organization, in taking the decision of using HR outsourcing services from a third-party company. Data were collected from HR staff through a questionnaire-based survey using convenient sampling with random selection. Descriptive statistics were used to analyze the data. Findings revealed that there is an increasing demand in outsourcing Payroll function in present context. Further, there is a prospective trend in outsourcing Human Resource Information Systems (HRIS) and foreign workers management and expatriate management. Confidentiality and customer service are the most influential factors on HR outsourcing decision. Firm size and sector had negligible on the degree of HRO. More than half of the firms surveyed intended to do more outsourcing in the near future.
Capital Structure and Firm Performance: Evidence from Listed Food and Beverage Companies in Sri Lanka
(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2016) Rajapaksha, R.M.P.W.M.; Wijesinghe, K.D.G.N.
Capital structure refers to the percentage of money at work in a company. There are two forms of capital: equity capital and debt capital. The firm’s capability of accomplish the needs of its stakeholders is closely related to the firm’s Capital Structure decisions. Capital Structure decision is to find out the best mix of debts and equity that a company uses to finance its business. This analysis performs to identify the relationship between Capital Structure and performance of the food and beverage companies in Sri Lanka, The examination performs using 15 companies listed on the Colombo Stock Exchange covering the years 2010-2015. The review utilizes Return on assets as dependent variable as well as the three capital structure measure Short Term Debt to Total Assets, Long Term Debt to Total Assets & Total Debt To Equity as autonomous variable. Descriptive, Regression and correlation analysis use as a techniques for measure the variables. The outcome reveals a positive relationship between the Short-Term Debt to Total Assets and Return on Assets. However there is a negative relationship between the Long-Term Debt to Total Assets and Return on Assets. The relationship between Total Debt and Return on Assets show a positive association as these findings analysis discovered that there is significant relationship between capital structure and performance of the listed food and beverage industry in Sri Lanka. Furthermore increasing short term debt within an organization will lead to enhance the performance of the food and beverage industry in Sri Lanka nevertheless keeping more long term debt will lead to decrease the performance of the listed food and beverage industry in Sri Lanka.
Capital Structure Effectiveness on Financial Performance of Manufacturing Firms in Sri Lanka
(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2016) Pathiraja, P.M.K.K.; Jayamaha, A.
Capital structure shows a significant role in financial decision making process in any business organization. Capital structure decision is more important because organizations need to maximize return and growth the value of the firm. Manager’s responsibility is a decide mix of debt capital and equity capital then it increase the value of the firm. Objective of this research is examine the impact of Capital Structure on financial Performance of manufacturing firms in Sri Lanka.by using 25 firms listed in Colombo stock exchange In this study data collect from secondary evidence through Annual Reports published by company which listed in Colombo stock exchange. There are four variables use for this study. Return on Asset (ROA) is a dependent variable and other explanatory variables are Debt to equity Ratio (DER), Long term Debt Ratio (LTDR) and Debt to Asset Ratio (DAR). Considering the relationship between the capital structure and financial performance. In debt to equity ratio has a negative relationship between Return on Asset and long term debt ratio has an insignificant negative relationship with ROA .and In Debt to Asset Ratio has a positive relationship between ROA. Relationship established between the capital structure and the financing structure is a part whole type relationship can be seen. It is recommended that firms should use more of equity than debt in financing their business activities. To get the better investment decision of mix of capital structure recommend to establish performance standards and those are properly communicate to the investors.
Challenges of IFRS Convergences of Insurance Industries in Sri Lanka
(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2016) Premarathna, H.S.M.; Bandara, R.M.S.
The Institute of Chartered Accountants of Sri Lanka (CASL) committed to convergence International Financial Reporting Standards (IFRS) with effect from 1st January 2012. The convergence have been generated significant challenges and problems on financial reporting in the terms of recognition, measurement, disclosures on accounting policies, consolidation and reporting to the insurance companies operated in Sri Lanka. This research highlights the challenges in convergence of IFRS in Sri Lankan insurance sector and the possible ways to overcome those challenges. The qualitative method was used for the study based on both primary and secondary data gathered from interviewing of selected insurance companies and annual reports. The measures taken by CASL and the other regulatory bodies to facilitate the smooth convergence to IFRS were admirable. The remedial actions such as consulting reputed audit and advisory firms relating to IFRS issues, giving foreign learning opportunity to the accounting staff to obtained the IFRS knowledge, the knowledge of IFRS on newly recruited accounting staff have been taken to overcome the problems and challenges.
Comparison between Economic Value Added (EVA) and Accounting Measurements in Predicting Stock Return in Listed Manufacturing Companies in Sri Lanka
(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2016) Nishadi, W.W.D.M.; Abeywardhana, D.K.Y.
The objective of this research is identifying the best measurement and provides suggestions to predict the stock return in Sri Lanka considering the listed manufacturing companies of Colombo stock exchange. Economic value added (EVA), Net Profit (NP), and Net Operational Profit after Tax (NOPAT) is independent variables, and stock return is dependent variable in this study. Data collected from using annual reports of 20 manufacturing companies for the period of 2010 to 2016. The findings show that there is a positive relationship between the stock return and all the independent variables. NOPAT is the most important measure in predicting the stock return. Further this study suggested that random effect model should be accepted and then it explain that differences among entities have some influence on the dependent variable. Accounting measures are better in predicting stock return than EVA.
Compliance with Section 23 of SLFRS for the SMEs 2011; Empirical Review on Small and Medium Sized Entity Enterprise (SMEs) Sri Lanka
(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2016) Bandara, G.M.S.; Rathnasiri, U.A.H.A.
The sector of Small and Medium Enterprises (SMEs) is said to be the backbone of all developed and developing nations. In spite of the level of development, SMEs play a pivotal role to generate economic wellbeing of a country. The Institute of Chartered Accountants of Sri Lanka (ICASL) adapted to this IFRS for SMEs to give the benefit of adopting with International accounting standards for SMEs in Sri Lanka. This Study examines the compliance with section 23 of SLFRSs for SMEs 2011 in Sri Lanka. The sample comprised of 15 SMEs which are operating in Gampaha and Colombo districts in the western province. A self-constructed compliance checklist and the compliance index were derived to denote the level of compliance among SMEs for the period of year2013 to 2015. The results revealed that slight increase of the compliance requirements under section 23 denoting 59%, 60% and 64% in 2013, 2014 and 2015 respectively. A significant noncompliance level was found with the general disclosures about revenue (Paragraph 23.30). Further, results of the study found that selected sample of entities have not engaged in transactions such as customer loyalty award relating transactions, exchange of goods during the past three years. The study examined there are misunderstanding relating to certain criteria of the section by preparers of financial statements. He study recommends policy makers to establish a proper monitoring mechanism to monitor the accounting practices and keep high level of compliance with the applicable accounting standards. Further it recommends standard setters to increase post investigations on compliance with accounting standards for SMEs.
Computerized Accounting System Usage of Small & Medium Scale Enterprises in Sri Lanka
(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2016) Weerasinghe, H.D.S.S.; Perera, H.A.P.L.
Most of the researches were found that, Small and Medium Enterprises (SMEs) play a significant role in almost all economies. For developing countries it is more critical than developed countries. As a developing country SMEs are identified as one of the most important elements in the economy by Sri Lankan government. Accounting system is a main component of an organization which determine the existence if the organization though evaluating the performance. In present most of the businesses are using Computerized Accounting System ot enhance the effectiveness and efficiency of accounting process. This research analyzed the Computerized Accounting System Usage by Small & Medium Scale Enterprises in Sri Lanka with reference to Colombo district. 100 SMEs were selected to obtain data and data collected through a questionnaire from SMEs in Colombo District. Out of the 100 samples selected 75 responses were received. The received data were analyzed using frequency analysis and cross tab analysis in descriptive statistics. It is found that majority of the SMEs are using computerized accounting systems but not the best software available in the market. Also there is a relationship in computerized accounting systems and the level of education of business owner and the accountant, number of accounting staff and the organizational structure. It is recommended to guide and carrying out trainings for SMEs by the government to adopt Computerized the SMEs with the technology and the boost the performance of the SMEs in Sri Lanka.
Corporate Governance and Firm Performance: Empirical Evidence from Selected Listed Companies in Sri Lanka
(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2016) Dehipegedara, B.A.C.; Sujeewa, G.M.M.
Corporate governance practices are very important to the corporates and its impact to the company’s performance is much debated areas. Good corporate governance practices enable to reduce the risk of the investors, to attach more investments and to improve the performance of companies. This study analyzed the current context of corporate governance and firm performance in listed companies in Sri Lanka. Data and other reliable information are taken from the audited financial statements and the governance section of annual reports from each selected companies. The sample was obtained from the “business today top 25 companies 2014- 2015” journal article, for the period from 2010 to 2014. Descriptive statistics, Pearson’s correlation, regression analysis and analysis of variance were applied to analyze the relationship between corporate governance and firm performance. The results shows that there is a positive relationship between corporate governance practices and ROE and ROA, in the Sri Lankan context. And also it was found that the relationship between number of meetings that hold by the companies and board composition with ROE and ROA is negative, and the relationship between Board committees and Board leadership structure with ROA or ROE is Positive. It is concluded that there is a positive relationship between corporate governance and firm performance in listed companies in Sri Lanka. On the other hand, some corporate governance practices were significantly related with firm performance and some other corporate governance practices were insignificantly related with firm performance.
Corporate Social Responsibility and the Financial Performance of the S &P Sl Top 20 Companies in Sri Lanka
(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2016) Lelwala, U.L.; Perera, H.A.P.L.
In present business context most of the business organizations are engaged in different kind of corporate social responsibility programmes voluntarily. There is no any law or government influence that the organizations must perform or engaged in corporate social responsibility activities. For those activities businesses incurred their financial resources and other non-financial resources. Most of the researchers researched on the relationship between corporate social responsibility and the financial performance because in general corporate social responsibility activities are cost to any company. There are many studies supporting for different types of relationships between the corporate social responsibility (positive, negative and neutral) and financial performance. For this analysis, it was selected 20 listed companies, in the S&P SL 20 in the Colombo stock exchange and for this analysis it was considered annual report data for the period from 2011 to 2015. This analysis mainly focussed on three regression models to test the relationship between the corporate social responsibility and the financial performance. These models represent the regression results of relationship between the corporate social responsibility and profit after tax, relationship between corporate social responsibility and return on assets and relationship between the corporate social responsibility and return on equity. Research findings shows that there is a positive relationship between the corporate social responsibility and profit after tax and negative relationship with return on assets and return on equity. Therefore it is concluded that, there is a relationship between the corporate social responsibility and financial performance of the companies.
Corporate Sustainability Reporting Practices of Financial Service Sector Institutions in Sri Lanka
(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2016) Akram, R.M.W.; Thilakarathne, P.M.C.
This study aims to explore the practices of sustainability reporting by leading financial services sector institutions in Sri Lanka when compared to GRI guidelines. The GRI guidelines which is used for the comparison purpose for the Financial Services sector (FSS) institutions include both GRI G4 framework and 16 GRI FSS specific performance indicators. In this study, the researcher investigated the FSS’s reporting in five wide areas of sustainability, which include environment, labor practices and decent works, product responsibility, human rights and society. The annual reports published in 2015 related to 15 leading financial institutions, which are listed on the Colombo Stock Exchange (CSE) were examined and coded using a technique called as content analysis.The overall findings of the research suggests that there is a lack of reporting on sustainability, however when the extent of disclosure is concerned, the society related information is broadly disclosed which is followed by disclosures on product responsibility and the issues related to environment. Moreover, the disclosures related to labor practices and decent work and human rights related information were relatively rare in the reports of financial institutions. Further, on the matter FSS- disclosures, less than 30% of the financial institutions have disclosed out of all sample financial institutions. Moreover, even within that 30% there is an inadequacy in the disclosure.The findings of the paper specify that the Sri Lankan financial institutions’ social disclosures could progress in this way to become more holistic and eventually (in association with the country’s central bank, CSE and other regulatory institutions) to come up with a type of arranged reporting to the point where they are appropriately branded as per the requirement.
Cost of Capital and Total Debt Ratio Affecting to the Value of the Firm: Special Reference with Top Capitalization Companies in Sri Lanka
(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2016) Priyankara, P.M.C.; Gunasekera, U.L.T.P.
A firm should always be directed towards the maximization of its value by examining its capital structure or financial leverage decision from the point of view of its impact on the firm value. This study examines the impact of Weighted Average Cost of Capital (WACC) and Total Debt Ratio (TDR) on Firm Value in Sri Lankan top capitalization companies. The study is significant for the decision makers to choose an optimal capital structure in a way to maximize the firm value. The study further tries to identify the most prominent factor. Twenty companies were selected as the sample from among 120 top capitalization companies. Data were collected from published audited annual reports and web site of Colombo Stock Exchange (CSE) from 2009 to 2015. By using the multiple regression model the study concluded that the Weighted Average Cost of Capital (WACC) in Sri Lankan context is positively related to Value of Firm and Total Debt Ratio negatively influenced to the Value of the Firm. Finally, it can be concluded that TDR is significantly effect on the value of firm and WACC has moderate effect.
Customer Acceptance of Internet Banking in Sri Lanka
(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2016) Perera, N.T.M.; Thilakarathne, C.R.
Technology affects the life of every individual at present age. Internet banking has also become one of the technologies which is getting recognition around the world. Internet banking plays a major role in banking sector. There are a lot of customers around the world who are adopting this technology very quickly but in developing countries like Sri Lanka the adoption ratio is very low. Another strategic challenge faced by the banks today is the growing and changing needs and anticipations of consumers with increased education levels and growing wealth. The current study examines the factors influencing the adoption of internet banking services in Sri Lanka. Primary data was collected from 202 respondents through a structured questionnaire. Regression analyses and descriptive statistic technique were used to study the relationship. The adoption/ non-adoption decision is highly influenced by factors namely Usefulness, Ease of use, Security and privacy, Trust. It was also revealed that age, gender and occupation are significantly related with internet banking adoption. Finally, this paper recommends that understanding the factors influencing the adoption of internet banking is very significant to the commercial banks and Bank managers can make use of this information to advance appropriate strategies to attract new customers to use Internet banking in future.
The Determinants of Capital Structure: Evidence from Listed Manufacturing Companies in Sri Lanka
(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2016) Kuruvita, K.A.S.P.; Jayamaha, A.
The aim of this study is to investigate, the factors that affect to the capital structure decision of manufacturing companies in Sri Lanka. Capital structure decision is most debatable topic in the current business environment. There are several factors which determine the leverage level of the firm. Therefore, it is more essential to identify the key firm specific factors, which determined the leverage of the firm. Different capital structure theories are reviewed (Modigliani – Miller Theory, Pecking order theory, Static trade-off theory and Agency cost theory) in order to formulate hypotheses regarding the determinants of capital structure of the listed manufacturing companies. For this study, a sample of 28 listed manufacturing companies was considered for the period 2011 to 2015. Five firm specific explanatory variables (Tangibility, Profitability, Growth, Age of the company and Tax-shield) were selected to discover what determines capital structure. This study employs Descriptive analysis, correlation analysis and multiple regression analysis to measure relationship between variables, individual and overall impact on optimal capital structure and to test the operational hypotheses. The major result of the study indicated that Age, Profitability and tax-shield variables are the significant firm specific determinants of capital structure in Sri Lankan manufacturing companies. In addition to this, the two variables (Tangibility of Assets and Profitability) showed negative relationship between leverage (Debt equity ratio). That negative result consistent with implication of pecking order theory. Remaining selected three variables (Growth rate, Age, Tax-shield) are positively correlated with capital structure, which is help to prove trade-off theory, and agency cost theory. The researcher believes that research findings should help managers to make optimal capital structure decisions.
Determinants of Financial Performance in Micro Finance Institutions of Sri Lanka
(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2016) Sudharika, W.P.A.; Madurapperuma, M.W.
Financial sector plays a key role in the economic development. It is generally agreed that a strong and healthy banking system is a prerequisite for sustainable economic growth. Financial sector includes mainly the banking system and the microfinance institutions in the country. Microfinance promises to reduce poverty. To achieve this amazing objective Microfinance institutions have to developed strong enough in financial performance because donor constancy is not a given. Thus the question is: In what extent the MFIspecific, industry-specific and macroeconomic factors determinants the Sri Lankan micro finance industry financial performance from the period 2010- 2015. The study was based on a six years secondary data obtained from annual reports. Regarding the explanatory variables, operational efficiency ratio, debt to equity ratio and capital assets ratio affect MFIs financial performance significantly. The outcome of the study shows that GDP growth rate and the debt equity ratio have positive relationship. But GDP growth rate statistically insignificant effect on their financial performance. The capital assets ratio, debt equity ratio and operational efficiency ratio have statically significant. The Sri Lankan MFIs policy makers and managers should give high concern to the expense management and also the government and policy makers should work combining both poverty decrease and financial self- sufficiency of MFIs. And also MFIs have to emulate profit-making banking performs by effecting a sound financial management and good managerial governance to assure their financial performance and in the long run sustainability.
Determinants of Firm Performance; With Special Reference to Commercial Banks in Sri Lanka
(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2016) Senanayaka, S.M.D.J.; Karunarathne, W.V.A.D.
Study was to discover the determinants, which affect to the profitability of Commercial banks in Sri Lanka. In the economy that the financial system is, important criteria and commercial banks are playing a key role under the financial system in the economy. The purpose of this study is to identify the determinants of the firms’ performance of commercial banks in Sri Lanka. There are many factors, which affects to the performance of commercial banks. In this study, it pays attention on the internal factors, which affects to commercial banks’ performance. The study has used Return on asset (ROA) and Return on Equity (ROE) alternatively to identify the banks’ performance. Capital Adequacy, Financial Leverage, Number of Branch and Liquidity ratio were considered as independent variables of the study. Secondary data of eight (08) listed commercial banks over 10 years were selected to the sample of the study. Correlation and Regression analysis were performed to analyzed data of the study. Constructed two models were used as alternative models. According to first model, that Capital Adequacy ratio, Debt to Equity ratio, Number of branches and the Liquidity assets ratio significantly affected the Return on Assets (ROA). According to the second model, that Capital Adequacy ratio and the Liquidity Assets ratio were significantly affected on Return on Equity (ROE) and the Debt to Equity ratio and the Number of branches were not affected on ROE significantly.
Determinants of Profitability in Commercial Banks in Sri Lanka
(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2016) Chandrasiri, C.L.S.S.; Thilakerathne, P.M.C.
The main purpose of this research study was to explore factors which follow Influence to determine profitability of commercial banks in Sri Lanka. During this period of 2011 – 2015 the Sri Lankan central bank presented new rules for amalgamation for financial institutions. In the perspective banking amalgamation valuing particular bank is having contemporary importance in that period. The focus of this study is mainly to get idea about determinants of commercial bank profitability in Sri Lanka. There are several factors which are impact to commercial bank profitability, only considered about internal quantitative factors which are influence to commercial bank profitability. But there are several factors which impact on commercial banks as internal and external. To identify internal quantitative factors which are impact to commercial bank profitability, got Return on asset (ROA) as profitability proxies that one is dependent variable of that research and also Banks capital and total Banks deposits. Those two considered as independent variables. To run linear regression and other programs used secondary data of 08 listed commercial banks and 02 semi government banks over 10 years’ quarterly data. Outs come of this study are, according to model there is a significant and positive relationship in between banks capital and banks total deposits with return on assets.