Junior Research Symposia

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The Relationship between Credit Risk Management and Profitability; Evidence from Commercial Banks in Sri Lanka
(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2016) Manike, H.M.S.W.P.; Rathnasiri, U.A.H.A.
The banking sector which acts as the backbone of the financial system in Sri Lanka has contributed the country by maintaining an economic growth However, at present banks in Sri Lanka face the problem of credit risk due to deteriorating credit quality. This credit risk management connects with the liquidity as well as profitability and overall risk management of the banks. This study analyzed the impact of credit risk management on profitability of commercial banks in Sri Lanka by using CAMEL model. CAMEL model indicators used to measure credit risk management and model included capital adequacy, asset quality, management efficiency, earning efficiency and liquidity which are influencing to the credit risk management. The study based on secondary data published by commercial banks in Sri Lanka. The sample was 10 banks for 2009 to 2010. Ordinary Least Square (OLS) regression method was used for data analysis. Findings noted that there is a positive relationship between credit risk management and bank performance of commercial banks in Sri Lanka. Further, Capital adequacy, earning efficiency, Liquidity coverage ratio have significant positive relationship with the profitability of commercial banks in Sri Lanka. Asset quality and management efficiency have negative relationship with financial performance of Sri Lankan commercial banks. The study envisaged that these ratios should be improved by the banks for the better performance and CAMEL is a significant tool to analysis of credit risk management.
Relevance of Financial Indicators on Investor’s Decisions in Banking Sector in Sri Lanka
(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2016) Bandula, M.G.V.M.; Rajapakse, R.M.D.A.P.
Shareholders use financial indicators as their main source of obtaining the information regarding the performance of a business. Business entities do have to prepare and present their financial information in a way that can be useful to investors and attract them. Accounting Information contained in financial statements should be accurate and transparent enough to provide an indication of a business performance and financial condition to the decision makers including investors. According to the previous studies related with this topic, investors tend to focus on information contained in financial statements. The main objective of this is to study the validity of Accounting Indicators (AI) for investor‘s decision in Banks registered under Colombo Stock Exchange (CSE) in Sri Lanka. The validity of Accounting Indicators was measured by correlation coefficient between Market Price Per share (MPS) and selected Accounting Indicators as Earning Per Share (EPS), Return On Equity (ROE) and Earnings Yield (EY). The sample was based on the Accounting Indicators derived from the published financial statements of the Commercial Banks listed under CSE. It covers a period of 5 years from 2011 to 2015. According to the results there is a significant relationship between Accounting Indicators and Market Price Per Share. Further it concluded that the investors still tend to consider Accounting Indicators obtained through published financial statements of Commercial Banks in Sri Lanka for investment decisions. Therefore the companies when preparing their financial statements have consider this in to fact an present them in a way that is easily understandable to the investors.
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.B
A 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.

Junior Research Symposia

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