Abstract:
The banking sector plays a vital role in contributing towards the national economic development. This
paper defines bank performance based on its profitability and operating efficiencies, which are measured
through several Key Performance Indicators (KPIs).The study primarily investigates whether such KPIs
are affected by the change of ownership in a company and secondly by several other factors such as the
size of the company, capital risk, credit risk and real GDP growth rate. To fulfill this purpose, NDB Bank
Sri Lanka is taken as a model, as the bank had undergone a change in ownership from government owned
to private, in the year 1993.Five years prior to and after its ownership change are analyzed to understand
whether there is a significant change in the financial performance. The study focuses on two other banks
as well in order to understand the market/industry trends. One of these is a private owned and the other is
state owned since inception. The KPIs are calculated based on available data. The t-test shows that there
is no statistically significant impact on the KPIs as a result of change in ownership. In addition an
adjusted coefficient of determination (adjusted R²) is also calculated for the change in KPIs, with a 90%
threshold to adhere with preceding research. As the adjusted R² results with a value less than 90% have
been identified for all the KPIs, a multiple regression analysis is conducted, among the KPIs and
ownership together with the other variables mentioned above. In conclusion the findings suggest that not
only privatization, but all factors collectively have significantly affected the profitability and operating
efficiencies of NDB Bank, Sri Lanka from 1994 to1998.
