Students’ Research Symposium - Department of Finance (SRS-DFIN)
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Item The Impact of Financial Literacy on Individual Investment Decisions: Mediating Role Of Risk Tolerance With Special Reference to Undergraduates in Western Province, Sri Lanka(Department of Finance, Faculty of Commerce and Management Studies University of Kelaniya Sri Lanka, 2024) Dilshan, W.M.T.E.; Piyananda, S.D.P.Introduction: One of the important elements influencing the financial investment decisions of both individual and institutional investors is financial risk tolerance, which has a significant impact on financial planning and financial counseling. In this study, the researcher investigated the effects of financial literacy on investment decisions with mediating effect of risk tolerance, by using the population of university undergraduates in Sri Lanka. Methodology: The sample was comprised of 200 undergraduates from four public universities in the western province. The study made use of primary data sources. By using a closed-ended questionnaire, data was gathered. A total of 200 replies were gathered, with 95 percent of them being recorded. Measures of central tendency were used in the study as descriptive statistics to describe the data. Multiple linear regression was used in the investigation. The independent variable was financial literacy, and the dependent variable was investment decisions. Furthermore, risk tolerance was used as the mediating variable. Findings: The results of the empirical investigation showed that financial risk tolerance is significantly influenced by investment decisions. This study has explored the mediating role of risk tolerance, and it demonstrated that higher levels of financial literacy make undergraduates more tolerant towards risk which in turn makes a better and more satisfying investment decision-making performance. Conclusion: In this regard, raising undergraduates' financial literacy through a variety of initiatives is likely to raise demand for financial products with diverse risk profiles, which will in turn aid the financial sector's expansion. As a result, this study has several consequences for politicians, financial advisors, and investors. The findings also support the value of financial education programs in raising financial literacy among university undergraduates.Item The Impact of Credit Risk on Financial Performance of Listed Licensed Commercial Banks in Sri Lanka(Department of Finance, Faculty of Commerce and Management Studies University of Kelaniya Sri Lanka, 2024) Premarathna, S.T.M.; Piyananda, S.D.P.Purpose: Based on the current crisis in Sri Lanka credit risk appears to be the biggest threat to banks. The substantial portion of non-performing loans on the bank's balance sheet affects its performance and reduces its profitability. This paper aims to analyze the impact of credit risk on the financial performance of listed commercial banks in Sri Lanka. Methodology: The secondary data from 10 commercial banks in Sri Lanka were collected for the sample period of 2013-2022 referring to their annual reports. Return on Asset (ROA) and Return on Equity (ROE) were used as proxies for financial performance indicators while Non-Performing Loans (NPLs), Capital Adequacy Ratio (CAR), and Loan Loss Provision (LLP) were used as credit risk indicators. The study employed descriptive statistics, panel regression analysis, and correlation analysis for data analysis. Findings: The study shows that non-performing loans (NPLs) demonstrated a significant impact on ROA and ROE. Conclusion: The practical implications of the study suggest that banks should aim to maintain adequate capital reserves, implement effective risk management strategies, consider firm size, monitor financial leverage, and engage in continuous research and regulatory compliance. To thrive in a dynamic financial landscape, commercial banks should stay updated on the latest research and industry best practices.Item The Impact of Micro Finance on Improvement of Borrowers’ Living Standards; Evidence from Niyagama Divisional Secretariat(Department of Finance, Faculty of Commerce and Management Studies University of Kelaniya Sri Lanka, 2024) Kaluarachchi, E. N.; Piyananda, S.D.P.Introduction: Microfinance is one of the tools to fill the gap due to the limitations of poor people in accessing conventional and commercial banks. Services provided by Microfinance Institutions (MFIs) include credit savings and insurance services. Many microfinance institutions also provide social intervention services such as training and education, institutional support, health and skills in line with their development objectives. (Khan &, Rahaman, 2007) Microfinance refers to financial services provided to low-income individuals or groups that are typically excluded from conventional banking. Most microfinance institutions focus on offering small working capital loans, sometimes called microloans or microloans. However, many also offer insurance and money transfers, and regulated microfinance banks offer savings accounts. This study is designed to analyze the impact of microfinance on various economic indicators such as quality of life through improvement of living standards and taken by active borrowers from different microfinance banks located in Niyagama Divisional Secretariat in Galle District. Methodology: The study employs Linear regression analysis through SPSS software as the primary method for data analysis to investigate the impact of Micro Finance on improvement of Borrowers’ Living Standards. The presented data are analyzed and interpreted using statistical tools like mean, standard deviation, correlation, regression, and Cronbach's alpha to achieve the results. Primary data collected through questionnaire from 136 respondents. Findings: The study found that the change in Microfinance Services helps to generate Household Income, Health Status and earn household assets to the clients involved in MF services within Amaragama Grama Niladhari Division. Conclusion: The study findings revealed that there is a significant positive relationship between microfinance services and living standard of the people. The credit service provided by the MFIs is widely appreciated by its clients. The majority of the clients are agreed with the microfinance services provide to them. It is concluded from the analysis that provision of loan facilities and acquiring the necessary skills on how to manage the funds to generate income and savings serves as a way to improve living standards.Item Impact of Bank-Specific Determinants on Financial Performance: With Special Reference to Commercial Banks in Sri Lanka(Department of Finance, Faculty of Commerce and Management Studies University of Kelaniya Sri Lanka, 2024) Dharmakeerthi, S.; Piyananda, S.D.P.Introduction: Banks play an important role in a country's financial system, especially during economic downturns. banks are therefore essential for the functioning of economies since they act as financial intermediaries. An effective banking system supports effective payments, boosts savings and investments, and consequently supports rapid economic growth. The purpose of this study is to generate new knowledge by analyzing the impact of internal factors of a bank on the financial performance of commercial banks in Sri Lanka, using share market performance as a proxy. Methodology: The banking system plays a major part in providing better financial services to the people in a country. This study aims to examine what extent bank internal factors impact the profitability of commercial banks in Sri Lanka. Capital adequacy, Operating cost efficiency, credit risk, and Liquidity, are considered as bank internal factors while return on assets is considered as the profitability measure of this study. Panel data has been collected from published financial statements of thirteen commercial banks listed on the central bank for the period of ten years from 2013 to 2022. The study employs panel regression analysis through STATA software as the primary method for data analysis to investigate the impact and relationship of bank-specific factors on the financial performance of commercial banks, addressing the main research questions. Conclusion: Commercial banks’ financial performance is significantly influenced by the efficiency level of operating cost, and credit risk, with 1% and 5 % significant levels respectively. capital adequacy has a positive and insignificant impact on profitability while liquidity risk insignificant impact on the profitability of commercial banks in Sri Lanka. The finding of this study provides information to present and future investors for making the best decision on which internal factors should be well analyzed when they make investments in the banking sector in Sri Lanka.Item The Impact of Corporate Governance on Firms’ Financial Performance: Evidence from Listed Finance Companies in Sri Lanka(Department of Finance, Faculty of Commerce and Management Studies University of Kelaniya Sri Lanka, 2024) Kaushalya, A.K.G.D.; Piyananda, S.D.P.Introduction: Corporate governance is a widely regarded core organizational concept that is crucial for the development, sustainability, and competitiveness of businesses. Strong business ethics, sensible policies and processes, and effective monitoring systems are thus regarded as elements of a system of competent corporate governance. The main objective of this study was to investigate the impact of Corporate Governance on the financial performance of listed finance companies in Sri Lanka. Methodology: Return on Assets (ROA) and Return on Equity (ROE) were used as proxies for firms performance whereas explanatory variables include Board Size, Board Composition, Audit Committee Size, Goard Gender. The sample picked out 20 listed finance companies based on companies with the highest market capitalization in financial statements as of 31st August 2023. The secondary data were collected through the annual report in these listed finance firms. Secondary data were collected using documentary information from the Company's annual report for the period 2018 to 2022. Data analysis was conducted using techniques such as, panel regression, descriptive analysis, and correlation analysis. Findings: Looking at the overall correlations suggests that factors such as board size, board meetings, board gender, and firm size have more positive impacts on ROA and ROE. And board composition has negative impacts on return on assets. But overall, these variables are not significant impact on ROA and ROE. Understanding the corporate governance mechanisms on financial performance is an important area of interest to academics, practitioners, and regulators. Conclusion: The empirical result of the study shows that all the CG variables (board size, board independence, and board gender) have positive and insignificant impacts on financial performance at 5% level of significance with the following, respectively. This suggests that board size is essential to achieving board effectiveness and increased firm performance, which is consistent with the findings of earlier studies. This finding is supported with the previous empirical finding of Mohammed Ibrahim and Buhari Baba (2019) who found positive association between board size, board independence, and board gender and firm performance.Item The Impact of Corporate Governance on Firms’ Financial Performance: Evidence from Listed Companies in Sri Lanka(Department of Finance, Faculty of Commerce and Management Studies University of Kelaniya Sri Lanka, 2024) Pathirana, D. P. H. N. M.; Piyananda, S.D.P.Introduction: financial performance is a subjective measure of the accountability of an entity for the results of its policies, operations, and activities quantified for an identified period in financial terms. Thus, having a structured corporate governance mechanism in place within the business organization is helpful for them to enhance their financial performance. This study aims to investigate the impact of features of corporate governance on the financial performance of listed entities in Sri Lanka from the non-financial sector. Methodology: To achieve the study objective annual data collected from 20 listed companies for the sample period from 2017-2022 were used in conducting the data analysis. Both Return on Asset (ROA) and Return on Equity (ROE) were used as proxies for financial performance indicators while Board Size (BSIZE), Board Composition (BC) and Board Gender (BGENDER), Audit Committee Size (ASIZE) were used as corporate governance indicators. Descriptive analysis, panel regression and correlation techniques were used in analyzing the data. Findings: The estimation regression analysis findings showed that there is a negative and significant relationship between BC and ROE which is a contradictory finding with that of the previous studies. Also, study findings revealed that there is a significant positive relationship between ASIZE and ROE. Conclusion: The study finding has practical implications highlighting the fact that listed entities shall think of the size of their audit committee together with the composition as it has a direct impact on financial performance of listed entities.Item The Impact of Corporate Governance on Firms’ Financial Performance: Evidence from Listed Banks in Sri Lanka(Department of Finance, Faculty of Commerce and Management Studies University of Kelaniya Sri Lanka, 2024) Piumali, K.G.A.P.; Piyananda, S.D.P.Introduction: Today, corporate governance has become a worldwide issue, and the rapid development of corporate governance compliance can be evidenced in many jurisdictions around the world. This study aims to empirically test the impact of corporate governance on a firm’s financial performance. Methodology: This study collected data from 10 firms listed on the Colombo Stock Exchange for a sample period of eleven years, from 2011 to 2022. Using quantitative approach, this study collected secondary data from the annual reports of the selected companies. Board size, board activism, the number of non-executive directors, board independence, and the gender of the board members were used as the explanatory variables to reflect the corporate governance of the companies selected. Both return on equity and return on assets were used to measure the financial performance of the selected company. Further, firm size was used as the control variable. 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 significant impact between ROA and the gender of the board members, whereas all the other hypotheses were rejected. In conclusion, this study revealed that the gender of the board members significantly impacts the financial performance of the listed banks in Sri Lanka. Conclusion: The findings of the study have practical implications for the strategic leaders of the banking industry, as they shall consider women with quality skills, experience, and strong decision-making abilities when making decisions on women's recruitment as board members. Because women are relatively emotional when making decisions, it can affect their financial performance.Item The Effect of Financial Innovation on Licensed Commercial Banks Performance in Sri Lanka(Department of Finance, Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2020) Soysa, R.W.D. S; Piyananda, S.D.P.Introduction –Technology change and competitiveness has spurred financial innovations and the innovation in the financial sector has developed the commercial banking sector in Sri Lanka. This study attempts to identify the effect of financial innovation on financial performance of licensed commercial banks in Sri Lanka. Design/Methodology/Approach – This study incorporated with bank performance through financial innovation whereas financial innovation variable comprises with mobile banking, internet banking, number of ATM’s and number credit cards. The study follows the purposive sampling method to collect secondary data from 10 licensed commercial banks during the period of 2011 to 2019. Findings - Based on the analyzed result every dependent variable contains stationarity and model residuals are normally distributed whereas analysis has followed a fixed effect model and it includes mobile banking is positively significant towards financial performance of commercial banks whereas internet banking and number of ATM’s are negatively significant towards financial performance of commercial banks. Conclusion - The result emphasizes that the overall model is statistically significant, and researcher conclude that there is a relationship between financial innovation and commercial bank performance hence different financial innovations affect differently towards commercial bank performance.Item Impact of Macroeconomic Variables on the Performance of the Licensed Finance Companies in Sri Lanka(Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2022) Zoysa, A.I.G.U.; Piyananda, S.D.P.Purpose: This research was undertaken to determine the effect of macroeconomic variables on financial performance of licensed finance companies in Sri Lanka. Design/methodology/approach: This study adopted a quantitative research approach using a sample of 12 licensed finance companies in Sri Lanka for the 10 years’ period. Secondary data on finance performance was obtained from the annual financial reports and Central bank reports. Hypotheses were tested using panel data regression model employing STATA. Findings: The regression results show that foreign reserves and GDP have a positive but not significant impact on the ROA and ROE of licensed finance companies in Sri Lanka. Results indicated that inflation is positively related to the financial performance of licensed finance companies in terms of ROA and ROE. The regression results show that increasing the exchange rate would lead to an increase in the financial performance of licensed finance companies in terms of ROA and ROE. Results indicated that the interest rate has a negative on the ROA and ROE of licensed finance companies in Sri Lanka. Originality: The Sri Lanka Government through the Central bank should come up with policies that create a conducive environment for finance companies to operate in since it will translate to the economic growth of the country. Mainly this study helps industry participants, investors, and regulators. Also, policymakers can use the findings of this study to establish policies that are related to the finance industry.Item Effects of the Exchange Rate Volatility on Financial Performance of Licensed Commercial Banks in Sri Lanka(Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2022) Wasana, W.E.; Piyananda, S.D.P.Purpose: The question of whether there exists a relationship between the volatility of exchange rates and the financial performance of licensed commercial banks in Sri Lanka was the subject of this research. Design / Methodology/ Approach: The study used three types of variables as dependent variable, independent variables, and control variables. Dependent variable was financial performance. The independent variable was exchange rate volatility while control variables were inflation, interest rate, and bank size. Secondary data was collected from the banks’ consolidated financial statements as well as the Central Bank of Sri Lanka. The study used the quantitative approach. The study also used panel data analysis using STATA Software Version 13.0 to aid in data analysis. Findings: The study established the existence of a negative association between exchange rate volatility and banks’ performance as measured by the returns on assets ratio. Negatively association between interest rate and ROA. There is a negative relationship between inflation change and ROA also. The bank size had a positive relationship with financial performance. Originality: Exchange rate volatility had an influence on commercial banks’ financial performance in Sri Lanka during the study period. The co-relation findings portrayed a weak negative connection between the FX volatility and the profits of banks over the study period. The correlation findings a medium negative connection between the interest rate, inflation change, and the profits of banks over the study period. The bank’s total assets increased over the research period. Bank size significantly influenced financial performance at a 95% confidence level. The exchange rate also significantly influences financial performance at a 90% confidence level at a 0.1 significant level.