South Asian Journal of Finance
Permanent URI for this communityhttp://repository.kln.ac.lk/handle/123456789/29479
Browse
49 results
Search Results
Item The Impact of Identified Determinants of Cryptocurrency Awareness among Young Sri Lankans(Department of Finance, University of Kelaniya., 2024) Madhusheka, K. K. K. G.; Jethusan, J.; Piyananda, S. D. P.Purpose: This study aims to investigate the impact of identified determinants of cryptocurrency awareness among young Sri Lankans, especially focusing on their financial literacy, financial market experience, computer self-efficacy, perceived benefits, and trust. Design/Methodology/Approach: This study employs a quantitative research design using a deductive approach. Accordingly, primary data collected from 375 undergraduates from different faculties at the University of Kelaniya was analyzed using descriptive statistics, correlation analysis, and regression analysis. Findings: The results of the study showed that there is a statistically significant impact of selected independent variables (financial literacy, financial market experience, computer self-efficacy, perceived benefit, and trust) on cryptocurrency awareness. In addition, the findings emphasize the importance of financial literacy and computer self-efficacy, suggesting the need for more educational initiatives to build up their awareness. The researcher recommended training programs for undergraduates to enhance digital skills, education on cryptocurrency risks, and collaboration with institutions to promote responsible investment and provide implications for academia and policymakers. Originality: As there are limited studies based on the social acceptance of cryptocurrencies among young Sri Lankans, this study uniquely focuses on young Sri Lankans, an under-researched demographic in the field of cryptocurrency adoption. While much of the existing literature centers on developed economies, this research highlights the importance of understanding cryptocurrency awareness in developing economies like Sri Lanka where economic conditions, technological infrastructure, and financial systems differ significantly.Item Stock Market Investing Intention Among Youth in Colombo District, Sri Lanka(Department of Finance, University of Kelaniya., 2024) Faiz, S.; Pathirawasam, C.Purpose: This study explores the investment interest of 20-29-year-old youth in Colombo District, Sri Lanka, specifically examining the influence of Psychological Behavior, Financial Literacy, Cost of Living, and Financial Risk Attitude on their propensity to invest in the stock market. Design/ Methodology Approach: Data was gathered through an online survey, yielding 297 valid responses after excluding outliers. The relationships between variables were analyzed using multiple regression. Findings: The results reveal that cost of living and psychological behavior significantly impact youth interest in stock market investment. At the same time, financial literacy and financial risk attitude show no significant influence on their investment decisions. Originality: This study offers a unique evaluation of factors affecting youth interest in stock market investment in Sri Lanka, addressing the low participation rate among this demographic. Practical Implications: The findings provide valuable insights for government agencies, investment firms, and policymakers, helping them understand the determinants of youth investment interest. This knowledge can inform the development of strategies to enhance youth engagement in the stock market, contributing to economic growth and national development.Item Socioeconomic Determinants of Per Capita GDP Growth in Pakistan: An Econometric Analysis(Department of Finance, University of Kelaniya., 2024) Ali, I.Purpose: This study explores the socioeconomic factors influencing per capita GDP in Pakistan by employing an econometrics analysis technique and an ARDL bounds testing methodology. The main goal of this research is to explore and measure both long-term and short-term relationships between per capita GDP and selected socioeconomic indicators. Design/Methodology/Approach: The analysis incorporates the ADF unit root test, a correlation matrix, and the ARDL bounds test. The sample consists of annual data from 2002 to 2022. Findings: The long-term analysis indicates that GDP growth rate and control of corruption have a significant positive impact on per capita GDP. On the other hand, government effectiveness, industry, military expenditure, and total debt are found to have negative effects on per capita GDP. In the short term, changes in GDP growth rate, government effectiveness, and unemployment rate are shown to have immediate effects on per capita GDP. The error correction term suggests a significant speed of adjustment back to the long-run equilibrium after a shock. The finding highlighted the critical role of macroeconomic stability and institutional quality in fostering economic growth. Policies aimed at improving government effectiveness, reducing military expenditure, and managing total debt are essential for improving per capita GDP. Strict control over corruption and steady GDP growth are crucial for achieving long-term economic prosperity and sustainability. Originality: This study provides a comprehensive analysis of the socioeconomic determinants of per capita GDP in Pakistan. It highlights both short-term and long-term impacts of macroeconomic stability and institutional quality, offering insights that can guide policymakers in promoting sustainable economic growth.Item Impact of Dividend Announcements on Share Prices: Evidence from Material Sector Companies Listed on the Colombo Stock Exchange(Department of Finance, University of Kelaniya., 2024) Suganya, D. F. J.; Vajeetharan, K.Purpose: Dividend announcements play a significant role in the financial market as it provides important information to investors regarding the financial health and future prospects of a company. The major aim of the study is to investigate the impact of dividend announcement on share prices and the informational content of dividend announcements pertaining to the listed material sector companies in Sri Lanka. Design/Methodology/Approach: A sample of 21 companies from the material sector was selected for the study. The daily closing stock prices and first and final dividend announcements for the period from 2017 to 2021 were used as the dependent variables and independent variables respectively. The event study method was employed to reach the findings. Findings: The findings of the study reveal that the dividend announcement leads to a positive market reaction and it supports the signaling theory. This study will be particularly useful to prospective investors in making decisions aligned with the dividend announcement pertaining to listed material sector firms in Sri Lanka. Originality: This study intends to examine the market reaction to dividend announcements specifically for material sector firms listed on the Colombo Stock Exchange in Sri Lanka, while previous studies have explored the signaling theory and market reactions to dividend announcements across all sectors in Sri Lanka. Further, it is unique in that it analyzes data collected during an abnormal situation in the country.Item Corporate Governance and Stock Liquidity: Evidence from Listed Companies in Sri Lanka(Department of Finance, University of Kelaniya., 2024) Weerasinghe, W. S.Purpose: This study aims to investigate the relationship between corporate governance and stock liquidity in listed companies in Sri Lanka. Design/Methodology/Approach: Corporate governance was evaluated using an index constructed of the board of directors, audit committee, remuneration committee, nomination committee, related party transaction review committee, frequency of meetings, and gender diversity. Stock liquidity was measured using the Amihud illiquidity ratio. A Quantitative research study was performed based on the data collected from 100 Sri Lankan listed companies excluding companies in the Banking, Finance, and Insurance sectors due to its inherent nature of being highly regulated. Findings: It was found that the mean (median) values of corporate governance of Sri Lanka are 0.706 (0.714) and the mean (median) values of stock illiquidity are 0.839 (0.379). The results of the correlation and regression analysis revealed that a weak association between corporate governance and stock liquidity relationship. Therefore, this study concludes that corporate governance has no significant impact on stock liquidity. Nonetheless, this study analyzed a limited sample of 100 companies, focusing primarily on board and its committee-related corporate governance attributes. Originality: This study provided new insights into relationship between corporate governance and stock liquidity which has a practical significance for managers, shareholders, investors, traders, financial analysts, and policy makers in Sri Lanka. It introduces a novel corporate governance index tailored specifically to Sri Lankan companies highlighting its potential improve the stock liquidity at both the company and market levels which will ultimately lead the country towards economic growth.Item Threshold Net Profit Condition in Predicting the Insurer’s Probability of Ruin(Department of Finance, University of Kelaniya., 2024) Ogungbenle, G. M.Purpose: An insurer is technically ruined when its surplus falls below a specified level that is less than a defined benchmark. In ruin analysis, the classical Lundberg’s model describes the claim’s process of an insurer where the claim size and the inter-arrival times are independent of each other, but this may not be reasonable enough since it is complex to express the adjustment coefficient in terms of the distributions of claim sizes and inter-arrival times. It is, therefore, reasonable to compare the ruin probability of insurer’s portfolio under Tijim’s approximation in order to determine the level at which the insurer could survive. The objectives of this study are to estimate the adjustment coefficient using moment generating function, confirm when the net profit condition is violated and construct model for the exponential parameter of the Tijim’s model. Design/Methodology/Approach: We compare ruin probabilities Lundberg’s and Tijim’s frameworks under Gamma claims. Findings: Computational evidence from the results reveals that Tijim’s approximation is comparatively lower than Lundberg’s upper bound and, therefore, represents an improvement. The empirical analysis suggests that the insurer should avoid initial reserve below 1,800,000.00. From tables 2 and 3, at any level of the initial capital u both models seem not converging to zero very fast. Within the interval 1000000 ≤ u ≤ 1800000, the ruin probability is trivially confirming that the net profit condition E(X) − a < 0 is violated. Originality: This paper has improved the Tijim’s estimation analytically as demonstrated in our empirical analysis.Item The Impact of Product Diversification and Insurance Activity to Insurance Industry Performance: Moderating Effect of Insurance Penetration: Evidence from India, Pakistan, and Sri Lanka(Department of Finance, University of Kelaniya., 2024) Rathnasiri, S. M. H. G.; Buddhika, H. J. R.Purpose: The research focused on the insurance industry performance of India, Pakistan & Sri Lanka were supposed to find the impact of product diversification and Insurance activity towards industry performance measured by ROE. Further insurance penetration is considered a moderating variable and objectives same as mentioned above. Product diversification and Insurance activity are key indicators of the insurance industry and insurance penetration is a key indicator of country performance measurement. Methodology: This quantitative study considered countries of Sri Lanka, India, and Pakistan in the South Asian Region and considered the period data from 2012 -2022. The highest developed first three countries were considered for evaluation purposes and diversified (companies operating in both Life & General) insurance companies from each country. Findings: Both product diversification and insurance activity exhibit negative correlations with insurance industry performance, indicating that increasing either factor may result in lower financial performance for insurers in these countries. Furthermore, insurance penetration significantly moderates the relationship between product diversification and insurance industry performance. The three hypotheses formulated and stated that impact is negative for product diversification and insurance activity. Further stated that insurance penetration moderated the insurance industry's performance. Conclusion: The findings underscore the importance of prudent strategic planning and management for diversified insurance companies in India, Pakistan & Sri Lanka. Diversified insurance firms are advised to carefully weigh the trade-offs between diversification and profitability. While diversification can mitigate risk, it may also lead to diminishing the returns in long run.Item Impact of Financial Inclusiveness on Household Indebtedness: Special Reference to Jaffna and Trincomalee Districts(Department of Finance, University of Kelaniya., 2024) Sazna, M. I. F.Purpose: In recent years, policymakers and researchers have been increasingly interested in understanding household indebtedness. This study used survey data from Trincomalee and Jaffna districts to explore how financial inclusiveness affects household indebtedness. Design/Methodology/Approach: Likewise, this investigation employed data on penetration, barriers, and usage of financial services to construct a comprehensive index, amalgamating scores from each aspect to gauge overall financial inclusion. 200 responses were obtained through convenience from households in Trincomalee and Jaffna districts. Findings: The researcher conducted regression analysis and found a significant positive relationship between financial inclusiveness and the dependency ratio, a negative marginal relationship with debt performance, and no relationship with the consumption yield balance. The study also revealed that financial inclusion significantly impacts household indebtedness and identified three influencing dimensions. Moreover, they observed that financial literacy has dual effects, with financially literate individuals displaying better market behavior, while financially illiterate individuals accumulate more debt due to income shocks. The study aims to fill the literature gap and contribute to understanding the financial landscape of a developing nation like Sri Lanka. Originality: The study, which focuses on the Sri Lankan districts of Trincomalee and Jaffna, offers context-specific insights into the relationship between financial inclusion and family debt in a developing country.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 Audit Quality and Its Impact on the Earnings Management in the Post-COVID Era: Evidence from Sri Lanka(Department of Finance, University of Kelaniya., 2024) Jeevakumar, J.; Mudalige, H. M. N. K.Purpose: The purpose of this study is to identify the impact of audit quality on the earnings management and explore the relationship between audit quality and earnings Management, with the main objective of identifying the impact of audit quality on the earnings management in the post-COVID era. The research utilizes a literature review that spans the recent years, focusing on audit quality-related literature and earnings management literature, such as the utilization of discretionary accruals and a modified version of the Healy’s Model. Design/Methodology/Approach: Audit quality is determined by looking at two proxies: the size of the audit firm and independence. The study was conducted using the data collected from 92 non-financial organizations with a financial year ending in March, during the post-COVID research period of 2019/20 to 2021/22. Descriptive statistics, correlation analysis, and regression analysis were among the methods utilized for analysing the acquired data. Findings: Although the results are inconclusive, the study suggests that the level of earnings management in Sri Lanka is not significantly influenced by the quality of audit conducted in the country. Therefore, this study concludes that audit quality has no significant impact on earnings management in the post-COVID era. Originality: This study focuses on the post-COVID years to examine the impact of audit quality on earnings management and the relationship between audit quality and earnings Management, given the limited research conducted in the Sri Lankan context and the inconclusive findings of previous literatures.