A CAMEL model analysis of selected banks in Bangladesh
Journal
International Journal of Business and Technopreneurship (IJBT)
ISSN
2232-1543
Date Issued
2016-06
Author(s)
Md. Tofael Hossain Majumder
Mohammed Mizanur Rahman
Abstract
This study attempts mainly to measure the financial performance of the fifteen
(15) selected banks in Bangladesh and to identify whether any significant
difference exists in the performance of the selected banks for the period 2009-
2013. CAMEL Model has been used to examine the financial strength of the
selected banks. Composite Rankings, Average, and ANOVA-test by using SPSS
are applied here to reach conclusion through the comparative and significant
analysis of different parameters of CAMEL. It is found that under the capital
adequacy ratio parameter IBBL is the top position, while IFICBL got lowest
rank. Under the asset quality parameter, AIBL held the top rank while RBL held
the lowest rank. Under management efficiency parameter, it is observed that top
rank taken by EBL and lowest rank taken by RBL. In terms of earning quality
parameter the capability of EBL got the top rank while TBL was at the lowest
position. Under the liquidity parameter DBBL stood on the top position and
NCCBL & BAL both are on the lowest position. By considering all of the
parameters of CAMEL, it is seen that EBL is the top position assessed by the
CAMEL Model compared to other banks under the study because of its strong
performance on the Capital Adequacy, Asset Quality, Management and
Earnings Ability. EIBBL is the second position, followed by DBBL, AIBL, IBBL
and other banks respectively. On the other hand, RBL is the lowest position
compared to other banks under the study because of its poor performance on the
Capital Adequacy, Asset Quality, Management Efficiency and Earnings Ability.
Therefore, RBL should improve the weaknesses of the mentioned ratios of the
CAMEL. The ANOVA test signifies that there is a significant difference in the
performance of the selected banks in Bangladesh assessed by the CAMEL
model. Therefore, the policy maker of the related lowest ranking banks should
take necessary steps to improve their weaknesses from the findings under the
study.