To anticipate the bankruptcy of Baoshang Bank based on CAMELS rating system

Lina Song () and Amirul Shah Md Shahbudin ()
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Lina Song: Universiti Sains Malaysia, School of Management
Amirul Shah Md Shahbudin: Universiti Sains Malaysia, School of Management

Bank i Kredyt, 2023, vol. 54, issue 1, 65-88

Abstract: On 7 February 2021, the Baoshang Bank was declared bankrupt, which raised concerns about the sustainability of the Chinese financial system. This study intends to assess the usefulness of the CAMELS system in predicting the bankruptcy of Chinese banks and reach the causes of the bank collapse according to the system. The findings reveal that the CAMELS framework could be able to predict the bankruptcy of Baoshang Bank, and that the asset emptying of Baoshang Bank by Tomorrow Group is the bank’s primary cause of insolvency. The supervisory authorities should have also realised that Baoshang Bank was showing multiple indicators of collapse and taken strong measures to prevent the bank’s bankruptcy. This paper contributes to the current literature on bank failure and predictive models by employing the CAMELS model. Additionally, regulatory authorities are interested in forecasting bank failure so that they can intervene in the crisis.

Keywords: CAMELS; bankruptcy prediction; Chinese commercial banks, Boashang Bank, bankruptcy predictors (search for similar items in EconPapers)
JEL-codes: G01 G17 G18 G21 G33 (search for similar items in EconPapers)
Date: 2023
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