A comparative performance evaluation of banking industry in Bangladesh: CAMEL rating approach

Md. Rostam Ali, Md. Rakibuzzaman Ratul (), Rushafa Tasnim Tisha () and Md. Ashikul Islam ()
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Md. Rostam Ali: Department of Accounting, Mawlana Bhashani Science and Technology University, Santosh, Tangail-1902, Bangladesh
Md. Rakibuzzaman Ratul: BBA & MBA, Department of Business Administration, Mawlana Bhashani Science and Technology University, Santosh, Tangail-1902, Bangladesh
Rushafa Tasnim Tisha: Master of Business Studies, Finance, Massey University, Auckland, New Zealand
Md. Ashikul Islam: Department of Finance, University of Rajshahi, Rajshahi-6205, Bangladesh

International Journal of Financial Engineering (IJFE), 2021, vol. 08, issue 01, 1-25

Abstract: This study is an attempt to evaluate and compare the performance of State-Owned Commercial Banks (SOCBs) and Private Commercial Banks (PCBs) of Bangladesh. CAMEL rating model has been applied to confess where a bank can be successful and where it has weaknesses. Data have been collected from four SOCBs and eight PCBs for the years 2014–2017. Among the selected SOCBs, it is found that Agrani Bank holds “Satisfactory” position where Sonali Bank holds “Fair” position through the year 2014–2017. On the other hand, Janata bank has improved its position from “Fair” to “Satisfactory” for the year 2016 and 2017. Moreover, Rupali Bank holds ‘Satisfactory’ position only for the year 2017 where this position was “Fair” for the year 2014–2016. On the other hand, it is found that all the selected PCBs hold “Satisfactory” position through the year 2014–2017. Though the composite rating for both types of banks (SOCBs and PCBs) is in “Satisfactory level”, Rank-1 is given to PCBs and Rank-2 is given to SOCBs. CAMEL ratio for “Asset quality” for both types of banks (SOCBs and PCBs) are showing “Dissatisfactory level”. “Earning quality” of SOCBs is showing at a “Marginal level”. Therefore, proper attention should be given to manage the “Asset quality” and SOCBs should increase the “Earning quality”.

Keywords: Banking industry; performance evaluation; CAMEL rating; State-Owned Commercial Banks (SOCBs); Private Commercial Banks (PCBs) (search for similar items in EconPapers)
Date: 2021
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DOI: 10.1142/S2424786320500528

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