Kanishka, W. L., Lakmal, W. A. I.
Department of Banking and Finance, Faculty of Business Studies and Finance, Wayamba University of Sri Lanka,


DOI : 10.57075/jaf1022303

The purpose of this study is to discover and analyze the impact of foreign exchange reserves on the living standards of Sri Lankan citizens. Export income, foreign debt, foreign remittances, and foreign reserves are employed as explanatory variables concerning Sri Lanka’s current crisis condition. The most widely used indicator of a country’s standard of living is its gross national income (GNI) per capita, in this study the researcher primarily focuses on the income approach determinants of foreign reserves inflow to Sri Lanka. Therefore, to measure Sri Lankan citizens’ living standards, the researcher employed the gross national income (GNI) per capita. The analysis utilizes data from 2001 to 2021 from the Central Bank of Sri Lanka (CBSL), the International Monetary Fund (IMF), and the World Bank (WB). The unit-root test, correlation analysis, and regression analysis were employed to assess the time-series data. EViews version 9 statistical software was used to screen secondary quantitative data and analyze the study’s findings. The test results demonstrated that export income, foreign debt, and foreign reserves had a positive and significant effect on Sri Lankan citizens’ living standards, however, foreign remittances have no significant effect on Sri Lankan citizens’ living standards. It was a timely matter that drove the researcher to investigate how the lack of foreign reserves has an impact on the living standards of Sri Lankan citizens. This study is expected to help decision-makers manage forex reserves more efficiently and effectively, and more crucially, to raise the living standards of Sri Lankans. As a result, implementing a proper management system for foreign reserves will be a better source for employing the reserves to improve the country’s financial stability. Furthermore, the findings of this study will be helpful to the government in addressing present loopholes in the economy. This study will be a valuable source of direction for future scholars as they handle topical issues in emerging countries’ economies associated with key eras. Researchers will profit from this research as well; as a result, they will be able to widen the existing empirical and theoretical review on the foreign reserves of developing countries such as Sri Lanka and their impact on citizens’ living standards.

Keywords: Export Income, Foreign Debts, Foreign Reserves, Foreign Remittances, Living Standards of Sri Lankan Citizens

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