Article Per Year (5 Year)
p-Index From 2021 - 2026
0.23
P-Index
This Author published in this journals
All Journal Indonesian Journal of Applied Accounting and Finance
Sazna
Unknown Affiliation
Economics, Econometrics & Finance

Published : 1 Documents Claim Missing Document
Claim Missing Document
Check
Articles

Found 1 Documents
Search

 1 
Effect of Loan Portfolio Diversification on Financial Performance: Evidence from Licensed Commercial Banks in Sri Lanka Sazna
Indonesian Journal of Applied Accounting and Finance Vol. 5 No. 2 (2025): December
Publisher : P3M Politeknik Negeri Banjarmasin

Show Abstract | Download Original | Original Source | Check in Google Scholar | DOI: 10.31961/ijaaf.v5i2.15318

Abstract

This study investigates the impact of loan portfolio diversification on the financial performance of licensed commercial banks in Sri Lanka from 2014 to 2023. While portfolio theory emphasizes diversification as a tool to reduce risk, its effect in the Sri Lankan context remains unclear. The study distinguishes between product-wise and sector-wise diversification to address this gap. Secondary data from 13 domestic licensed commercial banks were analyzed using purposive sampling. Loan portfolio diversification was measured through the Herfindahl–Hirschman Index (HHI), with Pearson’s correlation and panel data regression applied. Control variables included capital adequacy, non-performing loans, liquidity, and bank size. Results reveal that product-wise diversification negatively affects financial performance, while sector-wise diversification shows a significant positive effect. Capital adequacy ratio and non-performing loan ratio negatively influence performance, whereas liquidity has an insignificant positive impact. Bank size demonstrates a significant negative effect.  Findings suggest that banks can improve profitability through product concentration while enhancing stability via sector diversification, offering useful insights for managers and regulators.
Co-Authors