13th Students’ Research Symposium 2023/2024
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Item The Impact of Industry-Specific Factors on Non-Performing Loans: “Evidence from Licensed Banks and Finance Companies in Sri Lanka”(Department of Finance, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka., 2025) Sewwandi, B. S.; Dissanayake, D. M. U. H.Introduction: Diverse studies have been undertaken on different aspects of the industry and their respective impacts on the amount of non-performing loans in licensed banks and finance companies in Sri Lanka. These generalizations apply to every financial institution and concern both profitability and stability. These data will be considered based on quantitative measures that will cover a range of years from 2012 until 2023, which include gross amounts of loans as well as liquidity ratios, loans-to-deposit ratio, return on assets (ROA), size of the bank, and the level of capital adequacy ratio (CAR) as potential explanatory variables for NPL levels among the responding banks in the study. Methodology: The research relies on panel data analysis and regression models. Data was collected from the annual reports of 10 licensed banks and 5 licensed finance companies. The statistical techniques used included normality tests, correlation, regression analyses, and diagnostic checks (e.g., heteroskedasticity, and multicollinearity). Findings: Gross loans, liquidity ratios, and CAR have direct positive effects on NPLs as loan amounts and regulatory capital requirements increase, the risks get higher. In contrast, the loan-to-deposit ratio and ROA exhibit negative relationships with NPLs, which implies that improved profitability leads to fewer loan defaults. Thus, mixed results were given on bank size since larger institutions are linked to higher risks and operational complexity. Conclusion: The results highlight the necessity for fortified risk management, custom credit policies, and enhanced regulatory frameworks to mitigate NPLs. The research adds to the scant literature on dynamics in NPL in Sri Lanka and offers facts for policymakers and financial executives to consider.Item The Impact of Environmental, Social and Governance (ESG) Factors on Financial Performance - Evidence from Licensed Banks in Sri Lanka(Department of Finance, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka., 2025) Dilhani, G. H. M. S.; Dissanayake, D. M. U. H.Introduction: In this context, the integration of Environmental, Social, and Governance (ESG) factors has emerged as one of the critical determinants of financial performance in banking, especially in emerging markets such as Sri Lanka. The study will try to establish how ESG practices have influenced the financial performance of licensed banks in Sri Lanka, focusing on Return on Assets (ROA) and Return on Equity (ROE). Methodology: This study collected data from 10 licensed banks in Sri Lanka over a sample period of fifteen years, from 2009 to 2023. Using a quantitative approach, this study collected secondary data from the annual and sustainability reports of the selected banks. Environmental, social, and governance (ESG) factors were used as the independent variables of the banks selected. Both Return on Equity and Return on Assets were used to measure the financial performance of the selected banks. Further, bank size, leverage ratio, and dividend yield were used as the control variables. A series of fixed-effects panel regression models was used in this study to analyze the data. Findings: The results of the study revealed that there is a positive and significant impact between Environmental, Social, and Governance (ESG) factors and ROE and ROA, whereas all the other hypotheses were accepted. In conclusion, this study revealed that the ESG factors significantly impact the financial performance of the licensed banks in Sri Lanka. Conclusion: The study concludes that ESG integration is no longer solely a regulatory or ethical requirement but also a strategic imperative for financial performance and competitive advantage. It is encouraged that the licensed banks in Sri Lanka adopt comprehensive ESG frameworks with a view to ensuring sustainability and profitability.