Finance academics form body to fight finance illiteracy

Prof. Lalin Samarakoon (centre) of University of St. Thomas,Minnesota, USA, surrounded by academics who became the founding
members of the association at the inaugural meeting yesterdayPic by Waruna Wanniarachchi

„„By Chandeepa Wettasinghe Less than 5 percent of the population has a grasp of finance, which has contributed to the financial missteps taken by the Sri Lankan government, corporations and citizens in the past 3 decades, the Sri Lanka Finance Association stated at its inaugural meeting yesterday. The association, comprised of academics of finance from all state universities, was set up to address these shortcomings plaguing the Sri Lankan society today.

Our financial literacy level is less than 5 percent. Even some of educated people don’t understand this. Because of this, people are preying on the innocent. During the period of 2010-2012, people had to pay a lot. They burnt their fingers,” University of Sri Jayawardenapura Department Head Professor Hareendra Dissabandara said. Peradeniya University Senior Lecturer Dr. Athula Ekanayake noted that people are ready to invest with people who earn their trust, without considering any basic financial principles, such as the time value of money.

University of Sri Jayawardenapura Senior Lecturer Professor Abeyratne Bandara noted that the rural population is especially victimized, with financial institutions taking deposits from those areas, and financing large corporation without providing quality services to the rural populace. “Are our banks even real banks? The real tasks a bank should do are not done by our banks,” Ruhuna University Senior Lecturer Dr. Manjula Wanniarachchige noted. He added that most financial decisions in Sri Lanka are made by accountants, who are record keepers who focus on the past and advocate theories like cost cutting, while financial practitioners would instead focus on generating profits by looking at the future.

The founding members of the association agreed that the academics are partly to be blamed for staying within the confines of their universities in the past, instead of raising their voices, and contributing to social progression. “Our theoretical teachings are sound, but the application side is poor. Look at the government budgets, they are very poor,” South Eastern University Senior Lecturer Dr. Abdul Rauff said. Dr. Ekanayake said that the government chooses academics that support the government to appear in state media to support government budgets and policies.

“This causes the public to lose trust in academics. There’s no independent analysis. With the association, we can give independent analysis,” he added. Prof. Bandara said that there are pressure groups from all other industries to influence government budgets to be favourable for themselves while there aren’t pressure groups from the financial industry to advocate the government on proper policies and practices, especially related to taxation. Meanwhile, Prof. Dissabandara noted that companies are unwilling to become publicly listed despite the rise in importance of global financial markets, highlighting faults within the country’s corporate sector. Prof. Lalith Samarakoon from the University of St. Thomas, Minnesota, USA stressed that the same shortcomings in finance the country faced in the 1990s are still relevant today.

“The same recommendations I made in the ‘90s and 2000s can be made now, and will be made 10 years from now, though I hope that won’t be so,” he said. He noted that the association will increase the financial literacy of the country by setting up various seminars, conferences, research projects and lobbying for the development of financial education in universities and secondary schools. “We want to improve the public understanding of financial knowledge and issues and contribute to the advancement of financial literacy,” he said.