Abstract:
Study was to discover the determinants, which affect to the profitability of
Commercial banks in Sri Lanka. In the economy that the financial system is,
important criteria and commercial banks are playing a key role under the
financial system in the economy. The purpose of this study is to identify the
determinants of the firms’ performance of commercial banks in Sri Lanka.
There are many factors, which affects to the performance of commercial
banks. In this study, it pays attention on the internal factors, which affects to
commercial banks’ performance. The study has used Return on asset (ROA)
and Return on Equity (ROE) alternatively to identify the banks’ performance.
Capital Adequacy, Financial Leverage, Number of Branch and Liquidity ratio
were considered as independent variables of the study. Secondary data of
eight (08) listed commercial banks over 10 years were selected to the sample
of the study. Correlation and Regression analysis were performed to analyzed
data of the study. Constructed two models were used as alternative models.
According to first model, that Capital Adequacy ratio, Debt to Equity ratio,
Number of branches and the Liquidity assets ratio significantly affected the
Return on Assets (ROA). According to the second model, that Capital
Adequacy ratio and the Liquidity Assets ratio were significantly affected on
Return on Equity (ROE) and the Debt to Equity ratio and the Number of
branches were not affected on ROE significantly.
