ABSTRACT

Purpose: Comparison of NBFC’s Non-Performing loan Ratio was given a research problem to the researcher to argue that which factors will be affected to the NPL of high risky non-banking financial company of Sri Lanka as the case study. This study examines the factors affecting non-performing loans of ABC Financed Limited. The objectives were to identify the Institutional relating Factors, Customer relating factors and Remedial Mechanisms of Dealing with Non-Performing Loans.

Methodology: The scope of the research was limited to ten (10) Employees of ABC Finance Limited and ten (10) Customers of ABC Financed Limited. The study adopted the general qualitative research methodology using Interpretivism paradigm, Case study strategy and Grounded Theory Approach and in-depth interviews were conducted in order to collect data, and all the interviews were recorded, transcribed and coded. Open coding, selective coding and Axial coding were done in order to get the final framework.

Findings: The findings revealed, Customer relating factors also reflect in case of nonperforming loans and there are some new factors were also found as Institutional related factors. Some moderate mechanisms also found to implement for all the financial companies and Banks.

Originality / Value: The study contributes to expanding existing literature by investigating the issues of value relevance of financial statements within the Sri Lankan context, incorporating both red flags and accrual components.

KEYWORDS
Non-Performing Loans, Non-Banking Financial Institute, Institutional Factors, Customer Factors, Remedial Mechanisms

JEL CLASSIFICATION
G23, G32