EVALUATING THE IMPACT OF CAMEL RATIOS ON THE EFFICIENCY OF SELECTED INDIAN BANKS

Jayashree Koshti; Shital Rathod

doi:10.47413/vidya.v2i1.175

Authors

Dr. Jayashree Koshti Dr. Babasaheb Ambedkar Open University
Dr. Shital Rathod Assistant Professor, SLU Arts and H. & P. Thakore commerce college for women, Gujarat University

DOI:

https://doi.org/10.47413/vidya.v2i1.175

Keywords:

CAMEL Model, Public Sector Bank, Private Sector Banks, Regression Analysis

Abstract

The downfall of banks and financial institutions and the freezing of capital markets during the global financial crisis of 2007–2009 had a significant influence on the actual economy across the world. This crisis has made it apparent how crucial stability risk is and has emphasized the significance of performance evaluation. For the policy formulation and framing of strategies, it is essential to identify the sound and weaker aspects of the banks. Various ratios based models have been developed for the analyses of the banking sector, which helps in identification of strength and weakness of the banks. This study makes use of the CAMEL Model to analyze the different aspects of performance and soundness as well as the impact of the CAMEL ratios contributing to the efficiency of the selected public and private sector banks for the period of 17 years from 2005-2006 to 2021-2022. Based on the composite rating of the CAMEL Models, It has been found that HDFC bank Ltd. shows excellent performance. The study concluded that In order to be more efficient, selected public sector banks should concentrate on the value of NPAs and Liquidity and at the same time, these banks should pay attention to the Earnings Quality but not by compromising the efficiency of earnings while the selected Private sector banks should take proper steps to improve the operating profit, net profit, total interest income and net interest margin for becoming more efficient.

References

Bahadori, M., Talebnia, G., & Imani, Z. (2020). A Study of the Financial Soundness of Banks in the Framework of CAMEL model (Capital, Assets, Management, Earnings and Liquidity): The Case Study of Commercial and Non-Commercial Banks in Iran. Academic Journal of Accounting and Economic Researches, 9(2), 64-75.

Gupta, R. (2014). An analysis of Indian public sector banks using CAMEL approach. IOSR Journal of Business and Management, 16(1), 94-102.

Koshti, J. (2019). Performance Evaluation of Selected Private Sector Banks of India using CAMEL Analysis. IJRAR, 6(2), 673-683.

Kumar, S., & Sharma, R. (2014). Performance analysis of top Indian banks through CAMEL approach. International Journal of Advanced Research in Management and Social Sciences, 3(7), 81-92.

Majumder, M., Hossain, T., & Rahman, M. M. (2017). A camel model analysis of selected banks in Bangladesh. Mohammed Mizanur, A CAMEL Model Analysis of Selected Banks in Bangladesh (November 9, 2017).

Marvadi, C. (2018). Identifying Determinants of Bank Efficiency using Camel Model: A Study of Selected Indian Banks. IJRAR, 5(3), 8-15.

Nguyen, A. H., Nguyen, H. T., & Pham, H. T. (2020). Applying the CAMEL model to assess performance of commercial banks: empirical evidence from Vietnam. Banks and Bank Systems, 15(2), 177.