Adequacy of CAMELS Rating System in Measuring the Efficiency of Banking Industry: A Retrospect
CAMEL method was devised as a supervision tool to measure the efficiency of banks based on different parameters. The regulators are using on site and off site surveillance system to assess the financial soundness of banks. CAMEL rating system encourages transparency, evolution and transformation among banks. This method clearly identifies the institutional strengths and challenges in all financial and managerial areas. In this paper the researcher attempted to measure the efficiency of banks from public sector and private sector based on market capitalization rate. Among selected ten banks, five are from public sector and remaining five are from private sector banks to ensure the consistency in the selection procedure. One ratio each is selected based on parameters of CAMEL rating system like capital Adequacy, Asset Quality, Management Efficiency, Earning Capacity and Liquidity per parameter to explain the efficiency level of banks.
Keywords: CAMEL, Efficiency, Capital Adequacy, Asset Quality, Management Efficiency, Earning Capacity, Liquidity.
Volume: 3 | Issue: Special Issue
Issue Date: May , 2017