Journal of Business & Financial Affairs

Investigation Credit Risk Management Practices and Financial Performance of Commercial Banks in Sri Lanka

Abstract

Vidura Perera*

The Financial system in Sri Lanka is one of the rapidly booming sectors in Sri Lankan economy. It comprises different aspects and Financial institutions. This research investigate the relationship between credit risk management and banks performance. The set objectives were the following; to examine what extent credit risk management and bank Financial and to identify the relationship between credit risk management and bank inancial performance. The performance to ind out problems faced by credit risk managers of BOC in managing credit risk and to evaluate the relationship between credit risk management and inancial performance of BOC. This study is expected to be signi icant to all Sri Lanka banking sectors, university of Jaffna, future researchers and the general public and the specially banking sector in Sri Lanka. The study used BOC Ampara area branch and 20 branch as a sample to represent other commercial banks in Sri Lanka. Out of 170 staff of Ampara area branch the researcher took a sample of 50 respondents to represent others. Primary data was obtained by extracting information from questionnaires designed and provides to the staff to get answers from different respondent composed of BOC staff from different level.

The researcher used a descriptive and analytical research based on both qualitative and quantitative data. Secondary data were collected from annual reports, books, journals, newspapers and internet materials. In research data is presented in form of tables, while analysis and interpretation were based on frequencies and percentages and correlations table. The research found that BOC has a credit management system though it needs to be reviewed and adopted more to current Sri Lankan environment. The research found that there is a direct relationship between credit risk management and inancial performance of commercial banks. The research recommended that BOC should review and improve its credit policy and adopt it to Sri Lankan market and context and BOC should provide continuous training and updates to its staffs and BOC also should be market orientation.