4th SRS - DFIN 2015
Permanent URI for this collectionhttp://repository.kln.ac.lk/handle/123456789/12120
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Item Impact of Bank Income Diversification to Bank Performance: Evidence from Sri Lanka(Department of Finance, Faculty of Commerce and Management Studies, University of Kelaniya, 2015) Wijethilaka, E.T.S.Conventional perception in banking disputes that diversification tends to minimize bank risk and improve performance. This paper addresses this important strategy by evaluating the empirical relationship between bank income diversification and bank performance. The main objective of the study is to investigate the impact of income diversification on bank performance of Sri Lankan listed commercial banks. The lack of researchers regarding this topic under Sri Lankan banks and need of investigating the strategies to face the high competition within commercial banks in Sri Lankan context motivated the researcher to conduct a study regarding this area. This data set of the study covers Sri Lankan commercial banks during the sample period of 2010-2014. Data utilized in this study were extracted from the statement of comprehensive income and statement of financial position of listed banks in Colombo Stock Exchange (CSE) database. There are some control variables like asset size, equity and asset growth added to the model to ensure that there is no any effect for the relationship between bank income diversification and bank performance. Based on the findings of the research there is a positive relationship between bank income diversification and bank performance despite the fact that degree of diversification being not in the peak within Sri Lankan context. Additionally, asset size and asset growth variables are not significant variables to the both ROA and ROE models due to lack of risk management, information technology, human capital, geographical diversification and lower cost of capital within commercial banks in Sri Lankan context. But equity variable shows a significant negative relationship with bank performance in both models.Item Assessing the Impact of Micro Credit on Well-Being of Self-employees in Kuliyapitiya-West Regional Secretary Division(Department of Finance, Faculty of Commerce and Management Studies, University of Kelaniya, 2015) Weerasinghe, R.P.T.D.Micro credit is primarily focused towards the investments in rural productive activities to improve the well-being of borrowers. One of the leading institutions which provide micro loans in Sri Lanka for self-employees is the DiviNeguma Community bank. This study attempts to assess the impact of micro credit on well-being of self-employees in Kuliyapitiya-West regional secretary division, with special reference to the DiviNeguma Community bank. This study is a survey based research with sample of ninety six (96) self-employees in Kuliyapitiya-West regional secretary division. A four stage stratified random sampling design was used to select sample beneficiaries from the DiviNeguma Community Banks. The sample will include self-employees who have obtained loans in the range from Rs.10, 000.00 ,Rs.25, 000.00 ,Rs.50,000.00 and Rs.100,000.00 from 2010 to 2011, from Dandagamuwa DiviNeguma Community Bank and commenced/continued their business through those loans. Both primary and secondary data were used in this study over 2009 to 2015. In before-after approach, variables like monthly income, monthly savings, monthly expenditure on consumption (only for foods other than education and health), monthly expenditure on children’ education, monthly expenditure on health , housing condition and asset ownership were used for the comparison in between 2009 and 2015. Accordingly, there is a significant improvement in income of self-employees due to micro credit. In accordance with the improvement of income, their food consumption, improvement in condition of dwelling houses and improvement in asset ownership have also improved. But, an improvement in expenditure on children’s’ educations and health can’t be seen in accordance with the income improvement directly. Ultimately, it can be concluded that the micro credit has a positive impact on well-being of selfemployees in Kuliyapitiya-West regional secretary division.Item The Effect of Credit Risk Management on Financial Performance of Commercial Banks in Sri Lanka(Department of Finance, Faculty of Commerce and Management Studies, University of Kelaniya, 2015) Perera, W.T.D.Risk management is most important part of the financial institutions. Credit risk management is major part of the overall risk management for the worldwide financial institution. This study analyzed the impact of credit risk management on financial performance of commercial banks in Sri Lanka. And also attempted to establish if there exists any relationship between credit risk management and financial performance of commercial banks in Sri Lanka by using CAMEL (capital adequacy ratio, Asset quality, management efficiency, earning, and Liquidity coverage ratio). This research was facilitated by the use of secondary data which was published by commercial banks in Sri Lanka. This study used multiple OLS Regression to analyze the data. Accordingly, it was found that there is an impact of the credit risk managements on the financial performance of commercial bank in Sri Lanka. More specifically, Capital adequacy and Management efficiency have negative significant relationship with financial performance of state commercial banks in Sri Lanka. Asset quality has a positive relationship with financial performance of Sri Lankan commercial banks and Earning and Liquidity have positive significant relationship with financial performance. Finally, this study concludes CAMEL model can be used as a proxy for the credit risk management.Item Determinants of Profit Heterogeneity at Firm Level: Empirical Evidence from Sri Lankan Manufacturing Sector(Department of Finance, Faculty of Commerce and Management Studies, University of Kelaniya, 2015) Madumadavee, W.A.J.The fundamental purpose of this study is to determine and investigate the importance of different factors that has an impact on profit heterogeneity at firm level specifically within the context of Sri Lankan Manufacturing sector. When it comes to the Sri Lankan manufacturing sector, it is gradually developing year-by-year and the contribution to GDP is considerable. Therefore, going with an investigation on it is essential since it helps certain parties to make better decisions. This study used multiple regression analysis for panel data of 12 listed firms over the period of 2010- 2014 to explain variation in firm profitability. Using return on assets as the dependent variable, it has developed a model to observe the impact of different independent variables on profit variation. Profitability has a moderate positive relationship with the identified firm-specific variables. This study demonstrates that the variables such as liquidity, age since listed and size of the firm are the dominant factors in explaining total variation in profitability and the liquidity and age adversely affecting it. While size is having an inverse relationship with profitability of manufacturing firms, growth, capital intensity and market share is having a negative insignificant impact on profitability. It is found that leverage is having a positive insignificant relationship with the profitability. The findings have strong policy implications for both the companies and the economic managers of Sri Lanka. The managers and the owners of the manufacturing sector firms operating in countries like Sri Lanka should consider both the capital structure and liquidity level to realize higher profitability. The research will support firms to develop better strategy than before. It also helps the manufacturing firms to better deal with competition it faces from the industry. This is probably the first study of its kind that tries to explain variation in firm profitability in Sri Lankan manufacturing sector.Item Corporate Governance and Profitability Evidence from Sri Lankan Banking Industry(Department of Finance, Faculty of Commerce and Management Studies, University of Kelaniya, 2015) Herath, H.M.S.L.The objective of this research is to examine the impact of corporate governance mechanisms on firm performance of 13 banks in Sri Lankan banking industry over the period of 2005-2014. This is an exploratory study which addresses the research problem of does corporate governance affect the bank performance in Sri Lanka. Return on Equity (ROE) is used as dependent variable and, Firm Size, Firm Leverage, Audit committee composition, Board Independence, Board Size and CEO Duality used as independent variables. This research has used only secondary data and main source of data includes the annual report of the selected companies. Empirical research was conducted based on the 130 observations and findings are based on regression analysis. Researcher employed panel data methodology as a method of estimation. Descriptive statistics, ANOVA and t-test applied on data by using SPSS. Correlation techniques method has been used to test the hypotheses, to solve the research problem, and to achieve goals and objectives of the study. Accordingly, there is a significant impact of corporate governance on Performance of the banking industry in Sri Lanka. Moreover, there is a positive relationship between bank performance and board independence and firm size.Item Comparative Study on the Ownership, Financial Performance and Financial Efficiency of Private License Commercial Banks in Sri Lanka(Department of Finance, Faculty of Commerce and Management Studies, University of Kelaniya, 2015) Fernando, H.S.This study examines the relationship between ownership and financial performance and financial efficiency of private license commercial banks in Sri Lanka during the period of 2010-2014. The ownership is divided into domestic banks and foreign banks. To measure the financial performance, this study used return of assets, return on equity and to measure financial efficiency this study used capital adequacy and cost to income ratios. The study has used the secondary data obtained from annual reports from particular banks, Central Bank of Sri Lanka, web site of the banks, etc. By applying the panel data this study identified significant relationships of domestic banks with the financial performance and financial efficiency of the banks. The results of this study show domestic banks performed better compared to foreign banks in Sri Lanka.Item Profitability Indicators and Bank Performance in Post War Period: (Evidence from Local Listed Commercial Banks in Sri Lanka)(Department of Finance, Faculty of Commerce and Management Studies, University of Kelaniya, 2015) Sunimali, R.T.Banking sector is one of the largest sectors in Sri Lanka which highly contributes to Gross Domestic Product as well as to economic and human development in Sri Lanka. However, there are profitability indicators challenging to Sri Lankan banking industry in recent past resulting significant fluctuations in civil war period. Although there are various studies done to investigate the influence of profitability indicators on bank profitability, there are lack of studies on quantitative internal profitability determinants of bank performance in Sri Lankan context. This study investigates the profitability indicators and bank performance in post war era in Sri Lanka using a sample of annual time series data from 2010 to 2014. Data collected from secondary sources including Colombo Stock Exchange (CSE) without Guilt, Newspaper articles, Audited annual reports and statistics of CBSL. Quantitative data analyzed through descriptive statistics, regression analysis, correlation analysis and line charts while paying considerable attention on qualitative profitability indicators which relates to Sri Lankan banking industry in previous few years. Findings of the study exposed that Asset size, Deposits, Capital and Total Loan influence on bank profitability in Sri Lanka while there is a moderate positive relationship between return on equity and Asset size, Deposits, Total Loan. Moreover, there is a weak positive relationship between return on equity and capital. However, since the Asset size, Deposits, Capital and total Loans account for a small proportion of Sri Lankan bank profitability, concession agreements and other qualitative factors determine the large proportion of fluctuations in Sri Lankan bank performance in previous few years.Item Short-Term Interest Rates and Expected Stock Returns: Evidence from Sri Lanka(Department of Finance, Faculty of Commerce and Management Studies, University of Kelaniya, 2015) Subasinghe, S.A.D.P.S.The relationship of Sri Lankan short term interest rate and expected stock return was different from and foreign market. The theories and prior foreign studies results were negative relationship among the variables. This study examines the relationship between short term interest rates, as measured by Treasury bill yields of 91 days, 182 days and 364 days Treasury bill rates and stock returns in Sri Lanka. Regression analysis is employed to analyze the short term interest rate and stock return for the period of 2005 to 2015. It is employed on monthly, quarterly and annual time horizon. Stock returns based on All Share Price Index (ASPI) and S&P SL 20 index are used in the study and Treasury bill yields of 91 days, 182 days and 364 days are considered as the short term interest rates in this study. Furthermore analyze the periodically to identify the effect of after end the war in to the Sri Lankan economy in relating to the current research. The result of current research shows that negative relationship between interest rate and stock return in Sri Lanka. Furthermore, the Treasury bill rates effect on Stock return, becomes lager and more significant with longer maturity Treasury bill yield. Treasury bill yields explain up to 13%, 17%, and 13% in monthly, quarterly and annual returns respectively. Further it reveals that the explanatory power increases with the longer time horizon.Item The Impact of Leverage on Real Earnings Management: Evidence from Listed Manufacturing Companies in Colombo Stock Exchange(Department of Finance, Faculty of Commerce and Management Studies, University of Kelaniya, 2015) Kavinda, D.D.C.The amount of money that company has earned during a given period, usually a quarter or year, as reported based on appropriate accounting standards. Accounting earnings help to quantity the company's profitability, but investors should consider not just earnings quantity, but also earnings quality, in evaluating a company's accounting earnings. For recent years studies were done with regard to the accruals earnings management. Due to the high scrutiny of the lenders and the tendency to detect by the auditors, concepts have been changed to make economic sacrifices rather than manipulating accounting figures, by managing earnings through real activities such as practices that are less likely to draw auditor or regulatory scrutiny. The primary aim of this study is to examine the impact of Leverage on Real Earnings Management activities. The study was conducted using the sample of twenty five manufacturing companies’ listed in Colombo Stock Exchange with a firm-quarter observations for the period of 2009/2010 to 2014/2015 using a panel data analysis. The analysis is done based on the model developed by Roy Chowdhury in 2006.The results indicated that manufacturing companies are having abnormal cash flows and production cost in their operations and there is a significant positive association between the leverage and the real earnings management in the manufacturing companies listed in Colombo Stock Exchange, Which in turn could effects the earnings quality of the companies.Item The Impact of Final Cash Dividend Announcements in Colombo Stock Exchange(Department of Finance, Faculty of Commerce and Management Studies, University of Kelaniya, 2015) Hettiarachchi, H.R.B.P.Dividend is one of the return receive for investing in stocks apart from capital gains, right issues, bonus issues. Generally companies pay dividends in cash or split dividends. Companies use right issue as a tool to raise the capital and most of the times the issue price is lower than the trading price. Companies commence bonus issues by capitalizing its earnings and investors receive new shares the result of bonus issues. Accordingly, cash dividend is the only way to receive cash flow as a return to an investor. Therefore most of the investors consider cash dividend announcements and it impact on stock price due to the significant desire of investor’s on cash dividends. The main objective of the current study is to investigate the impact of final cash dividends on stock prices and thereby identify the pattern of announcements and the quarter which gives higher returns to the investors. Study uses standard event study methodology to identify the impact of the dividend and the investigation period is 2009 to 2014 including both years. Results of the study indicated that a positive relationship between stock return and dividend announcements and the dividend announcement in first quarter gives higher returns to the investors.