Junior Research Symposia
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Item The Relationship between Credit Risk and Bank Performance: A Study of Commercial Banks in Sri Lanka(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2016) Madushani, B.D.A.; Madurapperuma, M.W.Credit risk is the most important part of all commercial banks performing their works around the world. The objective of this study is to identify the relationship between credit risk and commercial banks performance in Sri Lanka. This study based on secondary data and data were obtained from various sources such as selected commercial banks annual reports, relevant articles, books and magazines etc. The panel data of a ten year period from 2006 to 2015 from the selected ten banks were used to examine the relationship between credit risk and commercial banks performance. Furthermore, Return on Assets (ROA) used as a profitability indicator while Non-Performing Loan to Total Loan Ratio (NPLR), Capital Adequacy Ratio (CAR) and Total Loan to Deposits Ratio (LTDR) used as credit risk indicators. The correlation and regression analysis was used to examine the relationship between credit risk and profitability indicators during the period and study by using E-views software. According to the empirical results, it was observed that NPLR and CAR has negative significant relationship with the commercial banks profitability and LTDR has positive significant relationship with the commercial banks profitability. Then this study concluded the credit risk has a significant relationship with the bank profitability. Therefore, this study recommended the banks to implement an effective tools and techniques to reduce the credit risk of commercial banks in Sri Lanka.Item The Effect of Credit Risk Management on Financial Performance of Commercial Banks in Sri Lanka(Department of Finance, Faculty of Commerce and Management Studies, University of Kelaniya, 2015) Perera, W.T.D.Risk management is most important part of the financial institutions. Credit risk management is major part of the overall risk management for the worldwide financial institution. This study analyzed the impact of credit risk management on financial performance of commercial banks in Sri Lanka. And also attempted to establish if there exists any relationship between credit risk management and financial performance of commercial banks in Sri Lanka by using CAMEL (capital adequacy ratio, Asset quality, management efficiency, earning, and Liquidity coverage ratio). This research was facilitated by the use of secondary data which was published by commercial banks in Sri Lanka. This study used multiple OLS Regression to analyze the data. Accordingly, it was found that there is an impact of the credit risk managements on the financial performance of commercial bank in Sri Lanka. More specifically, Capital adequacy and Management efficiency have negative significant relationship with financial performance of state commercial banks in Sri Lanka. Asset quality has a positive relationship with financial performance of Sri Lankan commercial banks and Earning and Liquidity have positive significant relationship with financial performance. Finally, this study concludes CAMEL model can be used as a proxy for the credit risk management.Item Determinants of Capital Adequacy Ratio of Commercial Banks in Sri Lanka(Department of Finance, Faculty of Commerce and Management Studies, University of Kelaniya, 2015) Herath, H.M.S.N.K.BA resilient banking groundwork plays a foremost part in supporting economic activity and backed to the overall growth of the country. Capital adequacy ratio is a vibrant measure of protection and soundness for banks and depository institutions because it functions as a buffer or cushion for absorbing losses. It is an essential requirement for financial institutions to maintain adequate level of capital and every financial organization must keep balance between capital and available risk in its assets in order to assure its stability. Thus, it has turn into one of the critical benchmarks for Banks. This study is an attempt to empirically examine the factors influencing the capital adequacy ratio (CAR) and to identify the impact of such factors on Capital adequacy Ratio of licensed commercial banks in Sri Lanka. Going with an investigation on this matter would provide assistance to certain parties when they making decisions. This study used multiple regression analysis for panel data of eight licensed commercial banks out of a population of Twenty-five banks in Sri Lanka for a 9 year essential requirement for financial institutions to maintain adequate level of capital and every financial organization must keep balance between capital and available risk in its assets in order to assure its stability. Thus, it has turn into one of the critical benchmarks for Banks. Profitability has a moderate positive relationship with the identified firm-specific variables. The results revealed that Bank size; Deposits, Liquidity and Profitability are negatively correlated with Capital Adequacy Ratio while Loans are positively correlated with Capital Adequacy Ratio.Item The impact of credit risk management on the performance of banking sector(Department of Accountancy, University of Kelaniya, 2015) Abewardhana, M.A.Credit risk management in banks has become more important not only because of the financial crisis that the industry is experiencing currently, but also a crucial concept which determine banks’ survival, growth and profitability. The aim of this study is to investigate the impact of credit risk management on the performance of banking sector in sir Lanka. Financial reports of seven commercial banking firms were used to analyze for seven years (2005 – 2011). The panel regression model was employed for the estimation of the model. In the model, Return on Equity (ROE) and Return on Asset (ROA) were used as the performance indicators while Non-Performing Loans (NPL) and Capital Adequacy Ratio (CAR) as credit risk management indicators. The findings revealed that credit risk management has a significant impact on the profitability of commercial banks’ in sir Lanka. Banks today are the largest financial institutions around the world, with branches and subsidiaries throughout everyone’s life. Commercial banks are facing risks when they are operating. Credit risk is one of the most significant risks that banks face, considering that granting credit is one of the main sources of income in banks. The management of the risk related to that credit affects the profitability of the banks. The aim of the research is to provide stakeholders with accurate information regarding the credit risk management of banking sector with its impact on profitability.