Commerce and Management

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Start date: 2020Subject: search.filters.subject.Firm size

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    Ownership Structure, Firm Size and the Operational Risk Management of Domestic Commercial Banks in Sri Lanka
    (Department of Finance, University of Kelaniya., 2023) Rathnayake, S.; Nanayakkara, K. G. M.
    Purpose: The banking sector is a crucial player in any economy, often affected by economic and social crises. Thus, it is vital to identify the intrinsic weaknesses of banks to manage their operational risk. The recent COVID-19 pandemic also severely affects the global financial sector, irrespective of the development status. Accordingly, this study is an attempt to find out the evidence on operational risk management and its relationship with bank size and ownership structure of the banking sector in one of the developing countries in the world, Sri Lanka. Design/Methodology/Approach: Financial data of eight out of thirteen commercial banks in Sri Lanka were analyzed over 13 years using panel data regression analysis. Sri Lankan banks' operational risk management practices are measured by excess capital (over the required minimum capital for operational risk). Deposits plus advances are used to calculate the size of a bank. Findings: It is revealed a significant positive relationship between firm size and operational risk management. A significant relationship between the ownership and excess capital held by banks for managing operational risk is also identified. This result leads to the conclusion that the larger commercial banks hold higher excess capital over the required minimum as per Basel accords. Moreover, government-owned banks are recognized to have more excess capital for operational risk management. Implications: Given the high amount of losses from bad loans and the central bank's implementation of Basel III regulations, the study has implications for Sri Lankan banks. Originality: When considering Sri Lankan context there can be found only a little amount of evidence on operational risk management practices and its relationship with size and ownership.
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    The Impact of Economic Crisis on Firm Performance: Evidence from Listed Commercial Banks in Sri Lanka
    (Department of Finance, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka., 2025) Prabodya, P. H. H.; Gunasekara, A. L.
    Introduction: This paper examines how the economic crisis impacted the listed commercial bank’s performance, focusing especially on performance indicators such as primary profitability ratios, Interest Income, and Non-Interest Income. Methodology: This investigation analyzes panel data covering ten companies over 10 years. The firm age, firm size and asset tangibility used as the control variables. Findings: According to the t-test results, there is a statistical difference between the previous and during crises groups with a significant decline in financial performance. The regression analysis showed that the financial crisis impacted the ROE most. Conclusion: The banks need to have proper risk management mechanisms during crisis periods to manage its negative impact. The future studies can use bank specific factors and macroeconomic factors as control variables to see whether the negative impact becomes significant after removing the influence of macroeconomic conditions and bank specific factors.