Abstract:
Financial crisis is a situation in which the supply of money is outpaced by the
demand for money. This means liquidity is quickly evaporated because
available money is withdrawn from banks. The purpose of this study is to
investigate impacts of global financial crisis on banking sector performance in
Sri Lanka. It is based on the two objectives which were to assess relationship
between financial crisis and bank performance and to examine impacts of
Capital Adequacy, Assets Quality, Management Quality, Earnings and
Liquidity on bank performance. Data was collected through the annual reports
of selected commercial banks from 2007 to 2015.A descriptive statistics,
correlation analysis and multiple regression analysis were used to investigate
relationship between Capital Adequacy Ratio, Gross Non Performing
Advances Ratio, Interest Coverage Ratio, Return on Equity and Liquid Assets
Ratio with the Bank performance. The findings indicate that Capital Adequacy
Ratio, Gross Non Performing Advances Ratio, Interest Coverage Ratio,
Return on Equity had a significant relationship with bank performance. But
Liquid Assets Ratio had a no significant relationship with bank performance.
Thus the study concludes that global financial crisis significantly influenced
on the bank performance. Final outcome of this research is adding knowledge
to bank entities to get an idea about how they can preserve their performance
within crisis period.
