Efficient debt recovery mechanism for economic growth : comparative analysis between Finland and Sri Lanka
Wijesuriya Gunawardena Mahawaduge, Indra Sirisumani Perera (2024)
2024
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Julkaisun pysyvä osoite on
https://urn.fi/URN:NBN:fi:amk-2024112931331
https://urn.fi/URN:NBN:fi:amk-2024112931331
Tiivistelmä
Bad debt collection in the banking sector takes a unique place in the banking sector playing a very important role in improving banks’ profitability. Moreover, it is directly connected with the economic growth of the country in various manners. Further debt collection mechanisms might be different from bank to bank as well as country to country. Therefore comparing and taking best practices from efficient and effective debt collection systems would benefit both individual banks as well as the entire economy of the country.
This study is about debt collection mechanisms in the banking sector with a comparative analysis of Finland and Sri Lanka. First identify the legal systems regarding debt collection in both countries and then analyse the practical mechanisms being occupied by banks in both countries. For such comparison two large and famous banks were selected from Finland and two large government banks were selected from Sri Lanka. Then the comparative analysis of the efficiency of such mechanisms was done using the NPL ratios and the profitability of each bank. Furthermore research focused on the relationship between the banks’ profitability and economic growth. The research was conducted using secondary data, literature and several websites. One of the highlighted findings is the lack of efficiency of Sri Lankan debt collection system and finally, it was recommended to improve inefficient collection mechanisms with best practices from Finland.
This study is about debt collection mechanisms in the banking sector with a comparative analysis of Finland and Sri Lanka. First identify the legal systems regarding debt collection in both countries and then analyse the practical mechanisms being occupied by banks in both countries. For such comparison two large and famous banks were selected from Finland and two large government banks were selected from Sri Lanka. Then the comparative analysis of the efficiency of such mechanisms was done using the NPL ratios and the profitability of each bank. Furthermore research focused on the relationship between the banks’ profitability and economic growth. The research was conducted using secondary data, literature and several websites. One of the highlighted findings is the lack of efficiency of Sri Lankan debt collection system and finally, it was recommended to improve inefficient collection mechanisms with best practices from Finland.