Sri Lanka has shown a high literacy rate of about 92% compared to other south Asian countries, and is on par with other developed countries. However, there is a noted dearth of surveys and studies that assesses the financial literacy level in the Sri Lankan context. It is observed that people with low levels of financial literacy suffer from that lack of knowledge at every stage of their lives and studies also assert that people with a high degree of financial literacy are more likely to plan for retirement, and that people who plan for retirement have more than doubled the wealth of people who don’t. On the other hand, the quite alarming fact noted is that even some educated professionals had fallen prey to financial scams in Sri Lanka, questioning the financial literacy of such intellectuals.
Thus, a study was carried out involving the undergraduates in the Sri Lankan state universities (due to being one of the major sources of future leaders) to find the level of financial literacy and how different specializations impact financial literacy levels. In the research conducted by the authors, the undergraduates were tested on their fundamental financial knowledge on dimensions of general finance, saving & borrowings (i.e., banking products), insurance and investment, and nearly 653 students from the five main state universities in ten main disciplines (business and non-business disciplines) were selected, where the data was collected over a period of 1 1/2 years. Undergraduates of the business discipline included undergraduates from accountancy and business management and non-business discipline included undergraduates from the fields of engineering, physical sciences, humanities and social sciences and information technology.
The findings indicate that the overall financial literacy level was on average 69.58% out of 100% of undergraduates in the business discipline. In terms of the sub-dimensions of financial literacy, these undergraduates scored the highest of 74.51% in the savings and borrowing sub-category, while they scored the lowest of 59.08% in the investment sub-dimension. When compared with the general literacy rate of 92% of this country, the findings of this study indicate that their overall average is quite low as well as knowledge in the investment sub-dimension is even lower.
The alarming finding is related to the undergraduates coming from the non-business majors, where the average financial literacy level was only 42.83% out of 100%, which is even lower than 50%. This we see as a major concern. Their knowledge in the investment related sub-dimension was just 28.16% out of 100%.
When considering these findings of the research conducted by the authors, it is clear that the undergraduates coming from the business management discipline had a better knowledge than students from non-business management disciplines. Although the students coming from the non-business disciplines may be conversant in their own areas of study, they were lacking an awareness in fundamental financial aspects that any citizen should possess to continue normal day-to-day life.
The authors observe that there is a systematic deficiency of personal finance education in our local education system. Introduction of subjects related to financial literacy for all students (regardless their discipline) in their formative stages as well as introducing course components related to accounting and finance in the curricula of non-business majors at universities (and other tertiary institutions) could be suggested to remedy this dire situation.
Authors– S.S. Edirisinghe (email@example.com) and S.S. Samarakkody,
Department of Accounting, Sri Lanka Institute of Advanced Technological Education, Sri Lanka,
Senior Prof. DBPH Dissa Bandara and Dr. AR Ajward,. Senior Lecturer
Department of Accounting, University of Sri Jayewardenepura, Sri Lanka
New IPS report on ‘Elasticity Estimates for Cigarettes in Sri Lanka’
• New study finds that increasing taxes on cigarettes will have twin advantages of reducing cigarette consumption and increasing government revenue.
• Calculated tax and price elasticities of demand for cigarettes show that smokers are price sensitive: increasing cigarette taxes by 10 per cent will reduce consumption by 8 per cent.
• A simulation exercise shows that when cigarette taxes are raised in line with inflation and streamlined between 2020-2023, government excise tax revenue will increase by LKR 37 billion by 2023 and 140,000 premature deaths from cigarette consumption can be prevented in the future.
The Institute of Policy Studies of Sri Lanka (IPS) has released a report which provides a comprehensive assessment of Sri Lanka’s historical and current tobacco tax policies to assess whether they are in line with the World Health Organization’s (WHO) recommended best practices. The new report ‘Elasticity Estimates for Cigarettes in Sri Lanka’ is authored by Dr. Nisha Arunathilake, Harini Weerasekera and Chamini Thilanka, and is part of a series of IPS research focusing on health and education.
According to the WHO, significant increases in tobacco taxes are the best means of controlling tobacco consumption. High taxes are an incentive for quitting tobacco, reducing consumption, and for not initiating smoking. The report finds that although cigarette prices have gone up over time, cigarettes are still affordable for smokers as tax increases have not kept up with inflation and income increases. Further, the tax structure is not streamlined, and tax policy changes have been implemented in an ad-hoc manner.
The report provides an estimate of price and income elasticities of cigarettes, and uses these to assess the effectiveness of tax increases on smoking prevalence in the country by conducting a simulation analysis. The results show that increasing cigarette taxes by 10 per cent will reduce consumption by 8 per cent. Finally, the study used the estimated tax elasticities to model the health and fiscal benefits of moving to inflation-adjusted and uniform excise tax system over 4 years.
DFCC Bank and AIA virtually recognise CEO Club award winners
Launched in 2018, the ‘CEO’s Club’ Awards organized annually by AIA Insurance for DFCC Bank staff, has since been held in grand style each quarter. The event is intended at recognizing and celebrating DFCC’s staff on their exceptional achievements in providing protection to the bank’s customers by introducing AIA’s insurance solutions.
Despite the limitations posed by the Covid-19 pandemic, the management of both DFCC and AIA were determined to continue the tradition of much deserved recognition for the DFCC staff who have excelled in providing insurance solutions to customers. As the first ever virtual AIA-DFCC CEO’s Club Awards Night, the event was held on Microsoft Teams. This pioneering event connected fifteen locations simultaneously, taking digital adoption to a new level, to celebrate award winners.
AIA CEO Nikhil Advani congratulated the winners, while commenting on the long-standing partnership between AIA and DFCC; “AIA are pioneers in Bancassurance in Sri Lanka and DFCC is one of our most valuable partners. Together over the years we have created a strong bond, driven by the common goal of providing protection and financial security to our customers. We are constantly defying odds and challenging the status quo and that is why we were able to take digital to the next level and ensure that these merited recognitions and celebrations took place, uninterrupted.”
DFCC CEO Lakshman Silva also applauded the winners and commented; “DFCC Bank, one of the oldest development banks in the country and now a full-service commercial bank, has had many trail-blazing initiatives. We entered into a partnership with AIA with the objective of enhancing our customer value proposition- and over the years have complemented each other, bringing exceptional value to customers. It was great, that together we were able to overcome the challenges posed by the Covid-19 pandemic and create an opportunity out of it, in creating a first of its kind digital event. This is what great partnerships do.”
Fifty-four CEO’s Club winners from across the island were recognized at the virtual Awards Night, for their achievements in 2019, with six others getting special recognition for their contribution as well. The top ten performers were Samitha Jayathilake ( Kottawa Branch) , Chamindu Anjana (Hikkaduwa Branch) , Dilini De Silva (Moratuwa Branch), Dinusha Jayathilaka (Anuradhapura Branch), Nuwan Abeywickrama (Kiribathgoda Branch), Anjalina Kumarihamy (Piliyandala Branch), Dilanka Jayawardena(Kaduwela Branch) , Lahiru Madushan(Central Sales Unit ) , Paskaranathan Ghengatharan (Kotahena Branch) and Lakshman Thambiraja (Batticaloa Branch ).
Tokyo Cement and Chevron Lubricants quarterly results boost market
By Hiran H.Senewiratne
The CSE turned positive yesterday with the releasing of impressive second and third quarter results by two investor favourite counters, Tokyo Cement and Chevron Lubricants, stock market analysts said.
It is said that Tokyo Cement’s second quarter results recorded Rs. 2.1 billion profit, which was a 183 percent increase compared to the corresponding quarter for year 2019, while Chevron Lubricants recorded Rs. 803 million in profits, which was a 29 percent increase compared to the corresponding quarter the previous year. Therefore, Chevron Lubricants announced a dividend of Rs. 3.50 per share for its shareholders yesterday.
Tokyo Cement’s impressive growth plus Chevron Lubricant’s dividend announcement removed the negative sentiment from the share market, which witnessed negative sentiments as a result of the government’s announcement of the three day Covid 19 curfew from today, market analysts said.
Amid those developments, the market experienced a day full of fluctuations and both indices moved upwards, i.e., the All Share Price Index was up by 126. 39 points and S and P SL20 went up by 51.82 points Turnover stood at Rs. 1.64 billion with a single crossing reported in JKH. The latter’s 1.26 million shares crossed for Rs. 157 million and its share was traded at Rs. 130.50.
In the retail market top five contributors to the turnover were, Tokyo Cement (Non Voting) Rs. 234.7 million (4.4 million shares traded), Tokyo Cement (Voting) Rs. 176.6 million (2.8 million shares traded), Expolanka Rs. 162.6 million (9.1 million shares traded), Dip Products Rs. 117.9 million (382,000 shares traded) and Chevron Lubricants Rs. 78.2 million (900,000 shares traded). During the day 55.1 million share volumes changed hands in 16138 transactions.
Further, two finance companies are going to merge to meet the co-capital requirement of the Central Bank, which is, Rs. 2 billion; they are Nation Lanka Finance and Sinhaputhra Finance. With the merger the surviving entity would be Sinhaputhra Finance. At present both companies are struggling to meet co-capital requirements of the Central Bank. Once the merger happens they will be able to meet the requirement, stock market analysts said.
Sri Lanka rupee was quoted at 184.25/40 to the US dollar on Thursday while bond yields were largely unchanged, dealers said. The rupee closed at 184.25/35 against the greenback on Wednesday. Bond markets were dull with little activity, dealers said.
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