Empirical Evidence of the Impact of Bank-Specific Factors on the Commercial Banks Performance: The CAMEL Model and the case of Ethiopian Banks

Kuhil, Abdurezak Mohammed

doi:10.26643/gis.v13i3.3287

Cited by 4 publications

(4 citation statements)

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“…For instance, Thakor [26] and Passmore and Sharpe [27] demonstrate that an increase in capital requirements based on risk can lead a bank to reduce the loans granted and increase its investment in government securities. Whatever its origin, loan portfolio allocation in conjunction with asset management have an effect in the overall credit union profitability (Kuhil and Boru, [23]; Edmister and Srivastava, [24]). Recent trend in loan portfolio allocation by credit union make their analysis appealing.…”

Section: Theory and Empirics Of Credit Union Assets Allocation And It...mentioning

confidence: 99%

Performance and Assets and Liabilities Management in the U.S. Credit Union

El Fadil,

Hessou

2024

Journal of Applied Finance &Amp; Banking

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Our main research objective is to study the influence of different decisions inherent to allocating assets, and to the weights given to some types of loans on the profitability of credit unions. Only few studies having been carried out on these financial institutions and on their asset portfolio structural change. Another objective is to analyse the influence of increasing deposits, as part of liabilities, on their financial performance. In order to reach our research objectives, we carried out statistical analyses and panel regressions by using biannual data from a large sample of credit unions in the United States. In fact, we analyzed the influence of the choices of allocating some assets and liabilities, represented by ratios, on the profit of credit unions in the United States for 20 years, represented by the return on assets. The results of our analysis enable us to conclude that attracting more deposits would ensure better profitability for these credit unions. As regards to loan types, the increase of the first mortgage loans weight is a profitable strategy. Our research add value to the field of financial institutions management, since most studies concern banks profitability and cannot be generalized to credit unions. Keywords: Credit unions, Credit unions performance, Credit unions asset portfolio structure, Credit union deposits, Assets and liabilities management in banking industry, First mortgage loan.

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Section: Theory and Empirics Of Credit Union Assets Allocation And It...mentioning

confidence: 99%

Performance and Assets and Liabilities Management in the U.S. Credit Union

El Fadil,

Hessou

2024

Journal of Applied Finance &Amp; Banking

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“…[ 34 ] showed that the performance of banks is significantly influenced by banks’ decisions related to capital, cost control, business diversification, asset quality, and liquidity.…”

Section: Literature Reviewmentioning

confidence: 99%

Key determinants of deposits volume using CAMEL rating system: The case of Saudi banks

AL-Najjar

Assous

2021

PLoS ONE

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CAMEL is considered one of the well-known banking rating systems used to build a proper bank ranking. In our paper, we investigate the CAMEL rating for Saudi banks, which is considered the second largest banking sector in GCC. The Saudi banking sector consists of 11 banks and is the leading sector in the Saudi stock index (TASI). In this research, we aim to determine the ranking of Saudi banks according to CAMEL composite and CAMEL overall ratings and explore the effects of these ratings on banks’ total deposits for the period from 2014 to 2018. The methodology involves four phases. In the first phase, we calculate the key financial ratios of CAMEL’s composites for each bank. In the second phase, we rank the banks from 1 to 11 to each one of CAMEL’s composites for each bank per year. In the third phase, we rank Saudi banks according to CAMEL composite and CAMEL overall. Finally, in the fourth phase, we run a regression model using CAMEL financial ratios rank as independent variable and banks’ total deposits as a dependent variable. Using the stepwise regression method, the results indicated that the best regression model has an adjusted R2 of 73.4% and a standard error of around 0.58. The results further indicated that capital measured by CAR, management as an efficiency ratio, earning with ROE proxy, and liquidity as loans to deposits have positive effects on banks’ total deposits. Meanwhile, earnings as net interest income to net revenue and liquidity calculated by CASA have a negative effect on banks’ total deposits. Finally, asset quality ratios and the rest of the ratios have no significant effect on banks’ total deposits.

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“…Olweny and Shipho (2011) have also used the CAMELS model to analyze the determinants of Kenya banks' profitability, and the results showed that all the bank-specific factors (e.g., five categories) that came from the CAMELS model had a statistically significant variable, and they have an important effect on the profitability of a bank. The categories of components in the CAMELS model are based on the previous studies of Obamuyi (2013), Rozzani and Rahman (2013), Rodica-Oana (2014), Salhuteru and Wattimena (2015), Magweva and Marime (2016), and Lelissa and Kuhil (2018), and Nguyen and Dang (2020), and Anh Huu , and Obamuyi (2013) looks at how bank capital, bank size, expense management, interest income, and the economy affect bank profitability in Nigeria. The fixed effects regression model was used on panel data from the financial statements of 20 banks from 2006 to 2012.…”

Section: Empirical Researchmentioning

confidence: 99%

“…One of the critical research questions investigated by Lelissa and Kuhil (2018) was how bankspecific factors relate to bank performance. The model developed is based on CAMEL, a widely used supervisory tool for monitoring bank performance.…”

Section: Empirical Researchmentioning

confidence: 99%

Determinants of bank performance in Vietnamese commercial banks: an application of the camels model

Nguyen

2021

Cogent Business & Management

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This study primarily aims to identify the determinants of Vietnamese commercial banks' performance from 2009 to 2020. Recent developments in the economy have brought banks' performance and their operations into the limelight. The paper deals with the CAMELS model as a framework for evaluating and measuring banks' performance. Additionally, using the quantitative regression method, the System Generalised Method of Moments (SGMM), and combining the previous studies, the author examined ten statistically significant factors, including all the pro-rata of the CAMELS model. Furthermore, the obtained results highlight the relationship between ownership type and banks' performance, implying that stateowned banks must improve and increase their soundness.

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Empirical Evidence of the Impact of Bank-Specific Factors on the Commercial Banks Performance: The CAMEL Model and the case of Ethiopian Banks

Cited by 4 publications

References 0 publications

Performance and Assets and Liabilities Management in the U.S. Credit Union

Performance and Assets and Liabilities Management in the U.S. Credit Union

Key determinants of deposits volume using CAMEL rating system: The case of Saudi banks

Determinants of bank performance in Vietnamese commercial banks: an application of the camels model

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