EFFECT OF CASH FLOW RISK MANAGEMENT PRACTICES ON SUSTAINABLE FINANCIAL PERFORMANCE OF LISTED DOMESTIC COMMERCIAL BANKS IN SRI LANKA.

Abstract

This study reports the results of investigation regarding effect of cash flow risk management practices on sustainable financial performance of listed domestic commercial banks in Sri Lanka. The research findings were based on secondary sources of data which were collected from annual reports, have been published in CSE Sri Lanka web site from 2010 to 2019. The panel regression method was used and data were analyzed with support of MS Excel and gathered data were analyzed by using STATA software to test the results through fixed and random effect models. Sustainable financial performance (SGR) is dependent variable and independent variables are risk management practices on operating cash flow, risk management practices on investment cash flow, risk management practices on finance cash flow and risk management practices on operating cash flow to shareholders equity. The researcher selected random effects GLS regression as the best fitted model through the hausman test. Findings of this study reveal that risk management practices on operating cash flow, risk management practices on investment cash flow and risk management practices on finance cash flow have positive relationship with sustainable financial performance however only risk management practices on operating cash flow shows positive significant relationship with sustainable financial performance while other two of variables have insignificant relationship with sustainable financial performance. Risk management practices on operating cash flow to shareholders’ equity have negative significant relationship with sustainable financial performance.