| Author | Lellwala, Asanka |
| Note | A project submitted in partial fulfillment of the requirements for the
degree of Professional Master in
Banking and Finance, School of Management |
| Publisher | Asian Institute of Technology |
| Abstract | This paper examined the impact of bank-specific determinants of the profitability of domestic commercial
banks in Sri Lanka, taking return on assets as the proxy for the profitability and six bank-specific variables
as independent variables. The study analyzed data of ten domestic commercial banks for a period of five
years starting from 2009 to 2013 by running panel data fixed effects model regression.
Empirical results show that retail business and fee and commission income are positively correlated and
highly significant variables to determine the profitability of domestic commercial banks in Sri Lanka.
Liquidity assets ratio and assets quality also have a positive and significant impact on profitability. This
result of positive impact of liquidity assets ratio on profitability, which is not in line with the general opinion
that explains the liquid assets are always associated with low margin. Further, cost to income ratio and size
of branch network are negatively correlated predictors and only the cost income ratio is significant.
Therefore, SBN has been shown not to be a bank-specific variable to determine the profitability of domestic
commercial banks of Sri Lanka, although the bankers are very much interested in opening new branches
covering the whole country.
Most of previous studies aimed at giving some inputs to policy makers whereas, this study aimed to reveal
some insights for the managements of DCBs in Sri Lanka. In addition, this study extended the great efforts
to consider the most relevant and interesting independent variables of the industry. Of special note, RB and
SBN which were considered here, had not been tested in previously published work about the Sri Lankan
banking industry. |
| Year | 2015 |
| Type | Project |
| School | School of Management (SOM) |
| Department | Other Field of Studies (No Department) |
| Academic Program/FoS | Master of Business Administration (MBA) (Publication code=SM) |
| Chairperson(s) | Badir, Yousre |
| Examination Committee(s) | Venkatesh, Sundar;Wafler, Beat Hans;Wijewardena, Weerakoon A. |
| Scholarship Donor(s) | AIT Fellowship |