Publications
Permanent URI for this communityhttp://repository.kln.ac.lk/handle/123456789/12169
Browse
2 results
Search Results
Item Impact of Credit Risks on Profitability of the Systematically Important Licensed Commercial Banks in Sri Lanka(Department of Finance, University of Kelaniya., 2024) Mithila, G.; Kengatharan, L.Purpose: This paper focuses on analyzing the impact of credit risks on the profitability of six major licensed commercial banks in Sri Lanka which account for around 53% of the market share from 2017 to 2021. Design/Methodology/Approach: Return on Equity (ROE) was considered to measure the profitability while measuring the credit risks and it was carried out through Non-Performing Loan ratio (NPL), Capital Adequacy Ratio (CAL), Total Loan to Assets ratio (LTA), and Total Loan to Deposit ratio (LTD). STATA is used to analyze the data. To test the hypothesis, Pooled OLS, random, and fixed effect models are employed, and the most suitable model is picked through the Breusch and Pagan LM test and Hausman tests. Based on the results pooled OLS is selected for the interpretation with an Adjusted R2 of 74%. Findings: The study reveals a significant negative impact of NPL on profitability, suggesting that increased NPL proportions heighten credit risk, potentially leading to losses and reduced profitability. Conversely, the LTD shows a negative relationship, potentially exposing banks to higher default risks despite boosting interest income. However, LTA demonstrates a positive relationship with ROE within a certain limit, suggesting enhanced interest income without significant default risk escalation. CAR, however, does not directly impact profitability, emphasizing its role in ensuring capital adequacy and regulatory compliance. Originality: This study only focuses on the systematically important licensed commercial banks as they represent more than 50% of the market share and have a significant influence on the Sri Lankan economy. Hence, managing their credit risk exposures is significantly important for the country.Item Credit risk management and shareholder value creation: with special reference to listed commercial banks in Sri Lanka(University of Kelaniya, 2016) Perera, L.A.S.; Morawakage, P.S.The main aim of this study is to investigate the effect of credit risk management on the shareholder value in listed commercial banks in Sri Lanka. The research has used only the secondary data for the purpose of analysis and the sources of data include the annual reports of selected quoted public banks. This study employed return on shares to measure the shareholder value while non-performing ratio, Capital adequacy ratio and Loans to deposits ratio have been used as the indicators of the credit risk management of the banks. Regression models were employed to do the empirical analysis and focuses on the descriptions of the output obtained from the SPSS. The findings reveal that credit risk management has a significant effect on shareholder value in all eight banks. Among the three credit risk management indicators, NPLR has the most significant effect on the return on shares. Through the results of the study it can be concluded that null hypothesis can be rejected since there is a significant relationship between credit risk management and shareholder value.