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    The Impact of Bank Specific Factors and Macro-Economic Factors on Non-Performing Loans of Commercial Banks in Sri Lanka
    (4th International Conference for Accounting Researchers and Educators, Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2018) Dilshani, W.N.; Abeywardane, D.K.Y.
    Non – Performing Loans (NPL) can be identified as a factor that is negatively affecting to banks’ performances hence it should be mitigated. Banks can’t totally avoid NPL so it becomes a risk for all banks. This study investigates the determinants factors of Non-Performing Loans in Sri Lankan Commercial Banks and aims to identify how both bank specific and macro-economic factors influences on NPL of commercial banks in Sri Lanka. Total Loans to Asset Ratio (LA), Liquidity Asset Ratio (LAR), and Return on Assets (ROA) are the indicators of bank specific factors while Gross Domestic Production (GDP), Inflation Rate (INF) are the indicators of macro-economic factors. The study used secondary data of 25 commercial banks covering the period of 2008 to 2017. Data were analyzed using regression analysis and EViews package. The result reveals that NPL can be affected by both bank specific factors and macro-economic factors. Further LA has positive correlation with NPL. With regards to macro-economic factors NPLs vary negatively with the growth rate of GDP. In conclusion the management of banks should adopt accurate risk mitigation tools by focusing on both bank specific and macro-economic factors that affect the level NPL in banks
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    The Impact of Credit Risk Management on the Performance of Banking Sector
    (Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2016) Abewardhana, N.A.K.M.A.; Thilakarathne, P.M.C.
    The aim of this study was to analyze the impact of credit risk management on the performance of banking sector in Sri Lanka and to establish if there exists any relationship between the credit risk management and performance of commercial banks in Sri Lanka. A causal research design was undertaken in this study and this was facilitated by the use of secondary data which was obtained from the Bank’s Annual reports. The study used regression analysis to analysis the data and findings have been presented in the form of tables and regression equations. The study found that there is a significant relationship between the credit risk management and performance of the banking sector. Further the study investigated that non-performing loans have positive relationship with financial performance (ROA). The analysis found that NPL and ROE have negative relationship through regression analysis that mean a unit increase in NPL, decrease ROE by 1.4. CAR and ROE have negative relationship, it can be described coefficient value is -.526. This study concludes that the credit risk management and financial performance (ROA, ROE) have significant negative relationship. The study recommends that commercial banks should try to keep their nonperforming loan at optimal level because nonperforming loan has negative relationship with profitability. Managers get higher evaluation regarding customer have ability to pay back when borrowing. This analysis suggests these banks to establish credit risk management unit for implementing best risk management practices.