Commerce and Management
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Item 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.Item The Impact of Capital Structure on Bank Performance: Evidence from Listed Commercial Banks in Sri Lanka(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2016) Senavirathna, Y.G.D.N.K.; Madurapperuma, M.W.Capital structure has attracted intense debate and scholarly attention across industries in the corporate finance literature over the past decades. Nonetheless, in the context of the banking industry, this subject has received a restricted research attention. Capital structure decision is the vital one since the performance of an enterprise is directly affected by such decision. Therefore, proper care and attention required to be given while determining capital structure decision. The study investigated the impact of capital structure on performance of ten listed Sri Lankan banks over the past 11 year period from 2005 to 2015. In order to meet the objectives of this study a quantitative panel data methodology was employed. The panel data least square model was applied for the data analysis through E-Views. Findings of this study, there are a few key points that can be used to conclude this study. The findings revealed that capital structure as measured by total debt to asset had statistically no significant impact, whereas debt to equity had statistically significant positive impact on performance of core business operations of commercial banks in Sri Lanka. Furthermore Growth, spread and asset size also had statistically significant and positive relationship with performance. Moreover, banks also advised to raise equity financing so that to keep costs of financing at minimum level and hence optimize performance and the value of banks. Finally, future researchers also recommended assessing the overall performance of banks and other business sectors in the area of this research. The outcomes of the study may guide banks, loan-creditors/debtors and policy makers to formulate better policy decisions as far as the capital structure is concerned. Moreover, the study reinforces and refines the body of knowledge relating to capital structure and performance of Banks in Sri Lanka.