Use of CAMEL Rating Framework: A Comparative Performance Evaluation of Selected Bangladeshi Private Commercial Banks

Rahman, Md. Zahidur; Islam, Md. Shohidul

doi:10.5539/ijef.v10n1p120

Cited by 26 publications

(31 citation statements)

References 6 publications

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“…Aspek selanjutnya merupakan kualitas aset yang menunjukkan kemampuan bank untuk mengelola asetnya dan untuk meminimalkan masalah, jatuh tempo, atau pinjaman terjadwal ulang(Khoury & Salem, 2018). Aspek ini diproksikan melalui rasio Non Performing Loan(NPL) yakni kredit macet yang dapat dimasukkan dalam total aktiva, serta rasio penyisihan penghapusan aktiva produktif.Aspek kualitas manajemen menunjukkan tindakan evaluasi dan kontrol yang dilakukan manajer untuk mencegah dan menghadapi permasalahan dalam organisasi perbankan yang diproksikan dengan Net Profit Margin (NPM).Efisiensi manajemen mendorong sistem manajemen merespons dengan cepat terhadap lingkungan yang dinamis dan berubah(Rahman & Islam, 2017). Rentabilitas diukur dengan 2 rasio yakni Return on Assets (ROA), dan Rasio Biaya Operasi dibandingkan dengan Pendapatan Operasi (BOPO).…”

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Pengaruh Rasio Keuangan Camel Terhadap Kondisi Di Bank Perkreditan Rakyat Kabupaten Tabanan

Nuryadiputra

2019

EEB

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Penelitian memiliki tujuan untuk menganalisis probabilitas kondisi bank perkreditan rakyat yang bermasalah yang dipengaruhi oleh rasio CAMEL dengan proksinya adalah rasio CAR, NPL, PPAP, NPM, ROA, BOPO, dan LDR. Populasi dalam penelitian merupakan Bank Perkreditan Rakyat Konvensional yang terdapat di Kabupaten Tabanan. Sampel ditentukan dengan metode sampel jenuh, sehingga jumlah sampel adalah 19 bank untuk 3 tahun pengamatan dari tahun 2015 sampai 2017, sehingga diperoleh 57 observasi. Analisis data dilakukan dengan teknik regresi logistik dengan tingkat signifikansi 5%. Hasil penelitian memperlihatkan bahwa rasio CAR, NPM, dan ROA berpengaruh negatif terhadap probabilitas kondisi bermasalah BPR di Kabupaten Tabanan. Variabel-variabel yang lain yaitu NPL, PPAP, BOPO, dan LDR berpengaruh positif terhadap probabilitas kondisi bermasalah di BPR Kabupaten Tabanan.

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Pengaruh Rasio Keuangan Camel Terhadap Kondisi Di Bank Perkreditan Rakyat Kabupaten Tabanan

Nuryadiputra

2019

EEB

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“…under the CAMELS framework. They include Girardone, Molyneux, and Gardener (2004) on the economics of banks; Estrella, Park, and Stavros (2000) on predicting banks' failure; Ramachandran (2012) on modifications in risk rating for banks in India; IMF and World Bank (2005), Roman and Saragu (2013), Dang (2011) and Rahman and Islam (2017) have used CRAR to represent capital adequacy in CAMELS framework while assessing the financial soundness of banks.…”

Section: Literature Surveymentioning

confidence: 99%

Is Risk Based Capital Ratio a True Measure of the Soundness of Banks? Evidence From India

Jalaludeen¹,

Dhanavanthan²,

Lazar³

2021

IJFR

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The capital to risk-weighted assets ratio (CRAR) introduced by the Basel Committee on Banking Supervision (BCBS) of the Bank for International Settlement (BIS) is widely used as an important measure of the soundness of banks. However, international institutions, academics, and market analytics have increasingly questioned the reliability of the ratio which has been revised a number of times since its inception, to make it more robust. The main objective of the present study is to assess the adequacy of using CRAR as a measure of the soundness of banks. One of the most popular methods used for the analysis of the banks’ financial soundness is CAMELS framework which uses six key dimensions: capital adequacy, asset quality, management quality, earning ability, liquidity, and sensitivity to market risk. Before the introduction of CRAR, the ratio of capital to the total assets was widely used as a measure of capital adequacy in the CAMELS framework. However, when risk-based CRAR was introduced, banking regulators and policymakers started using it in the CAMELS framework for representing capital adequacy. In this paper, we argue that CRAR, as a comprehensive forward-looking measure, encapsulates all the six dimensions of the financial soundness of banks, representing various facets of banking operations, which are covered in the CAMELS framework. We, therefore, develop a theoretical framework to establish the relationship between risk-based CRAR and the important ratios used under the CAMELS framework and then empirically investigate the relationship using a panel regression model using data of Indian banks for the period 2009–2018. The results indicate that CRAR has a significant and theoretically consistent relationship with all six dimensions of the CAMEL framework. The study, therefore, does not only confirm the appropriateness of using CRAR as a measure of the soundness of banks, but also opens up a debate on whether CRAR can be an alternative for the CAMELS framework.

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“…For measuring the financial performance and rating these banks according to the composite rating system, CAMELS was employed by the study. (Rahman & Islam, 2018) in their study took an attempt to evaluate and compare the performance of the banking sector in Bangladesh. Accordingly, the CAMELS rating system had been employed by the study to grade the banks based on their performances.…”

Section: Literature Reviewmentioning

confidence: 99%

Benchmarking and Rating of Private Commercial Banks of Bangladesh Through CAMELS Components

Haq¹,

Nasrin²

2020

BJMSR

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The banking sector of Bangladesh is becoming more complicated than before. Ensuring the financial stability of the economy, monitoring, supervision, and continuous performance evaluation of the banking sector are compulsory. The present study, therefore, is an attempt to evaluate and compare the performance of our banks. One of the most effective supervisory techniques, CAMELS rating system has been used to benchmark and rate the banks based on their performance. In this study, 21 private commercial banks (PCBs) have been chosen as samples to meet the purpose of the study. Data for analysis has been collected from the banks’ annual reports for the period of 2008 to 2018. The result shows that none of the banks could achieve a 'strong' position, and only SEBL was able to secure a ‘satisfactory’ mark. Unfortunately, AB bank was rated "marginal" in the composite rating, which is the lowest rating among the sample banks. Hence, AB bank needs to develop reform and follow-up programs as soon as possible to avoid financial failure.

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Use of CAMEL Rating Framework: A Comparative Performance Evaluation of Selected Bangladeshi Private Commercial Banks

Cited by 26 publications

References 6 publications

Pengaruh Rasio Keuangan Camel Terhadap Kondisi Di Bank Perkreditan Rakyat Kabupaten Tabanan

Pengaruh Rasio Keuangan Camel Terhadap Kondisi Di Bank Perkreditan Rakyat Kabupaten Tabanan

Is Risk Based Capital Ratio a True Measure of the Soundness of Banks? Evidence From India

Benchmarking and Rating of Private Commercial Banks of Bangladesh Through CAMELS Components

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