Paper Title
Does Credit Risk Effecton Financial Performance of Sri Lankan Commercial Banks?

Abstract
This study examines the impact of Credit Risk on the Financial Performance of the Commercial Banks in Sri Lanka over the period often years (2005 to 2014) using six commercial banks. The secondary data was collected from the bank�s annual reports andanalyzed using correlation and multiple regression analysis. Return on Equity (ROE) was used as the financial performance indicator while Non-Performing Loan Ratio (NPLR) and Capital Adequacy Ratio (CAR) were used as credit risk indicators. The results of the analysis stated that both NPLR and CAR have negative and relatively significant effect on ROE, while NPLR males higher significant effect on ROEcompare to CAR. The study concluded that credit risk still remains a major concern for the commercial banks in Sri Lanka, because credit risk is an important predictor of bank financial performance. The researcher suggests that all banks should adopt a credit risk grading system since risk grading is a key measurement of a bank�s asset quality. Keywords� Credit Risk, Financial Performance, Sri Lankan Commercial Banks.