Volume 5, Issue 2, April 2016, Page: 19-28
Health Check-up of the Commercial Banks in Bangladesh: An Application of CAMELS Model
Rozina Akter, Department of Business Administration, Faculty of Business and Economics, Daffodil International University, Dhaka, Bangladesh
Received: Dec. 30, 2015;       Accepted: Jan. 18, 2016;       Published: Mar. 12, 2016
DOI: 10.11648/j.ijber.20160502.11      View  4261      Downloads  141
Abstract
Banking sector is the most important component of financial system. Development of banking system contributes to the stability and sustainable economic growth. This is one of the Major Service sectors in Bangladesh economy, which divided into four categories of scheduled Banks. These are Nationalized Commercial Banks (NCBs), Government Owned Development Financial Institutions (DFIs), Private Commercial Banks (PCBs), and Foreign Commercial Banks (FCBs). The aim of the research is to comparatively analyze the financial soundness of the commercial banks that operate in Bangladesh. In order to achieve this we have used one of the most popular methods for the analysis of the financial soundness of banks, namely the CAMELS framework. At present, a total of 56 banks (4 SCBs, 4 DFIs, 39 PCBs and 9 FCBs) having 8794 branches are operating in Bangladesh with Tk. 8675.2 billion total assets and Tk. 6558.7 billion deposits. Quantitative comparison has been done on the basis of CAMEL ratio. CAMEL ratios mainly indicate the adequacy of the risk based capital, non-performing loan position, expenditure-income ratio, return on assets (ROA), return on equity (ROE), net interest income (NII), writing of debt, liquid assets, excess liquidity, etc. The study compares the 4 types of bank's time series performance on the basis of selected CAMEL ratios. CAMELS rating system shows that no banks have been rated 1 or Strong; the rating of 28 banks were 2 or satisfactory; rating of 12 banks were 3 or fair; 6 banks were rated 4 or marginal and 1 bank received 5 or unsatisfactory rating.
Keywords
Capital Adequacy, Asset Quality, Management Efficiency, Earnings, Liquidity, Sensitivity to Market Risk, RoA, ROE, NPL, NIM
To cite this article
Rozina Akter, Health Check-up of the Commercial Banks in Bangladesh: An Application of CAMELS Model, International Journal of Business and Economics Research. Vol. 5, No. 2, 2016, pp. 19-28. doi: 10.11648/j.ijber.20160502.11
Copyright
Copyright © 2016 Authors retain the copyright of this article.
This article is an open access article distributed under the Creative Commons Attribution License (http://creativecommons.org/licenses/by/4.0/) which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
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