Study of Camel Rating System in Banking Supervision- A Case Study Of Nepal Bangladesh Bank Ltd
DOI:
https://doi.org/10.31150/ajebm.Vol1.Iss3.33Keywords:
NEPAL BANGLADESH BANK LTD, Performance Evaluation, CAMEL Model and Ranking MethodAbstract
The banking sector plays in important role in the country’s economy, acting as an intermediary to all industries. As the banking sector has a major impact on the economy as a whole. Performance evaluation of the banking sector is an effective measure and indicator to check the soundness of economic activities of an economy. Many methods are employed to analyse banking performance. One of the popular methods is the CAMELS framework, developed in the early 1970’s by federal regulators in the USA. The CAMELS rating system is based upon an evaluation of six critical elements of a financial institution’s operations: Capital adequacy, Asset quality, Management soundness, Earnings and profitability, Liquidity, and Sensitivity to market risk. Under this bank is required to enhance capital adequacy, strengthen asset quality, improve management, increase earnings, maintain liquidity, and reduce sensitivity to various financial risks. In the present study an attempt was made to evaluate the performance & financial soundness of NEPAL BANGLADESH BANK LTD using CAMEL approach. Quantitative parameters are computed and updated on a quarterly basis while in respect of the qualitative parameters the ratings / marks given at the time of previous on-site examination
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References
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24 Sangmi, M. and Nazir, T. (2010), “Analyzing Financial Performance of Commercial Banks in India: Application of CAMEL Model,” Pak. J. Commer. Soc. Sci., 4(1)
25 Said, M (2003). Liquidity, solvency, and efficiency: An empirical analysis of the Japanese banks’ distress. Journal of Oxford, Vol. 5, No.3, pp. 354-358.
26 Thomson, J. B. (1991), “Predicting Bank Failures in the 1980s,” Federal Reserve Bank of Cleveland Economic Review, 27.
27 Waldron, M., Jordan, C., and MacGregor, A. (2006), “the Information Content of Loan Default Disclosure in the Prediction of Bank Failure,” Journal of Business & Economic Research, 4(9).
28 Whalen, G. and Thomson, J. B. (1988), “Using Financial Data to Identify Changes in Bank Conditioning. Federal Reserve Bank of Cleveland,” Economic Review, 24(1), 17-26.
29 Wirnkar, A.D. and Tanko, M. (2008), “CAMELS and Banks Performance Evaluation: The Way Forward,” Working Paper Series, SSRN: http://ssrn.com/abstract=1150968
30. Annual Report of Nepal Bangladesh Bank Ltd. FY 2007-2008
31. Banking & Financial Statistics (January 20012) –published by Nepal Rastra Bank Ltd.
2 Altman, I.E. (1968), “Financial Ratios, Discriminant Analysis and Prediction of Corporate Bankruptcy,” Journal of Finance, September 1968, New York University.
3 Angadi and Devraj 1983, ‘Profitability and Productivity of Banks in India’, Economic and Political Weekly, Vol. 18 (Nov), pp. 26.
4 Barr, Richard S. et al. 2002, ‘Evaluating the Productive Efficiency and Performance of U.S. Commercial Banks’, Engineering Management, Vol. 28, No.8, pp. 19.
5 Beck, Thorsten and Rose Levine 2004, ‘Stock Market, Banks and Growth: Penal Evidence’, Journal of Banking and Finance, Vol. 28, pp. 423-42.
6 Bhayani, S. (2006). Performance of the New Indian Private Sector Banks: A Comparative Study. Journal of Management Research, Vol. 5, No.11, pp. 53-70.
7 Bodla, B.S. and Verma, R. 2006, ‘Evaluating Performance of Banks through CAMEL Model: A Case Study of SBI and ICICI’, The ICFAI Journal of Bank Management,Vol.5, No.3, pp.49-63.
8 Eccher, E. A., Ramesh K., and Thiagarajan S. R. (1996), “Fair value disclosures by bank holding companies,” Journal of Accounting and Economics, 22(1).
9 Elliott, J. A., Douglas, H. L. J., and Shaw, W. H. (1991), “The Evaluation by the Financial Markets of Changes in Bank Loan Loss Reserve Levels,” The Accounting Review, 66(4).
10 Godlewski, C. (2003). Bank’s Default Modelisation: An Application to Banks from Emerging Market Economies. Journal of Social Science Research Network, Vol.4, No.3, pp. 150-155.
11 Gupta, R. (2008). A CAMEL Model Analysis of Private Sector Banks in India. Journal of Gyan Management, Vol.2, No.1, pp. 3-8.
12 Gerschenkron, Alexander 1962, ‘Economic Backwardness in Historical Perspective: A Book of Essay’, Cambridge, Mass.: The Belknap Press of Harvard University Press.
13 Gupta, R. 2008, ‘A CAMEL Model Analysis of Private Sector Banks in India’, Journal of Gyan Management, Vol. 2, No. 1, pp. 3-8.
14 Kapil, S. & Kapil, K. N 2005, ‘CAMEL‘s Ratings and its Correlation to Pricing Stocks— An Analysis of Indian Banks’, University Journal of Bank Management, Vol. 4, No. 1, pp. 64-78.
15 Lane, W. R., Looney, S. W., and Wansley J. W. (1986), “An Application of the Cox Proportional Hazards Model to Bank Failure,” Journal of Banking and Finance, 10(4).
16 Looney, S. W., Wansley, J. W., and Lane, W. R. (1989), “An Examination of Misclassifications with Bank Failure Prediction Models,” Journal of Economics and Business, 41(4).
17 Maishanu, M.M. (2004), “A Univariate Approach to Predicting failure in the Commercial Banking Sub-Sector,” Nigerian Journal of Accounting Research, Vol. 1, No. 1.
18 Mous, L. (2005), “Predicting bankruptcy with discriminant analysis and decision tree using financial ratios,” Working Paper Series, University of Rotterdam.
19 Prasuna D G (2003).Performance Snapshot 2003-04. Chartered Financial Analyst, Vol. 10, No.11, pp.6-13.
20 Prasuna, D G 2004, ‘Performance Snapshot 2003-04’, Chartered Financial Analyst, Vol. X, No. 11, pp. 6-13.
21 Sarker, A. 2005, ‘CAMEL Rating System in the Context of Islamic Banking: A Proposed ‘S’ for Shariah Framework’, Journal of Islamic Economics and Finance, Vol. 1, No.1, pp. 78-84.
22 Satish, D; Jutur, Sharath and Surender, V 2005, ‘Indian Banking Performance and Development 2004-05’, Chartered Financial Analyst, Vol. 11, No. 10, pp. 6-15.
23 Singh, D. and Kohli, G. 2006, ‘Evaluation of Private Sector Banks in India: A SWOT Analysis’, Journal of Management Research, Vol. 6, No. 2, pp. 84-101.
24 Sangmi, M. and Nazir, T. (2010), “Analyzing Financial Performance of Commercial Banks in India: Application of CAMEL Model,” Pak. J. Commer. Soc. Sci., 4(1)
25 Said, M (2003). Liquidity, solvency, and efficiency: An empirical analysis of the Japanese banks’ distress. Journal of Oxford, Vol. 5, No.3, pp. 354-358.
26 Thomson, J. B. (1991), “Predicting Bank Failures in the 1980s,” Federal Reserve Bank of Cleveland Economic Review, 27.
27 Waldron, M., Jordan, C., and MacGregor, A. (2006), “the Information Content of Loan Default Disclosure in the Prediction of Bank Failure,” Journal of Business & Economic Research, 4(9).
28 Whalen, G. and Thomson, J. B. (1988), “Using Financial Data to Identify Changes in Bank Conditioning. Federal Reserve Bank of Cleveland,” Economic Review, 24(1), 17-26.
29 Wirnkar, A.D. and Tanko, M. (2008), “CAMELS and Banks Performance Evaluation: The Way Forward,” Working Paper Series, SSRN: http://ssrn.com/abstract=1150968
30. Annual Report of Nepal Bangladesh Bank Ltd. FY 2007-2008
31. Banking & Financial Statistics (January 20012) –published by Nepal Rastra Bank Ltd.
Published
2018-07-31
How to Cite
Gawde, S., Panda, A. C., & Ingale, D. (2018). Study of Camel Rating System in Banking Supervision- A Case Study Of Nepal Bangladesh Bank Ltd. American Journal of Economics and Business Management, 1(3), 74–96. https://doi.org/10.31150/ajebm.Vol1.Iss3.33
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