Use of CAMEL Model: A Study on Financial Performance of Selected Commercial Banks in Bangladesh

Abstract

Banking sector is one of the fastest growing sectors in Bangladesh. Modern banking sector is becoming more complex than before. Evaluating Bangladeshi banking sector is challenging task. There are so many factors, which need to be taken care while differentiating good banks from bad ones. Sound financial health of a bank is the guarantee not only to its depositors but is equally significant for the shareholders, employees and whole economy of a country as well. As a result to this statement, efforts have been made from time to time, to measure the financial position of each bank and manage it efficiently and effectively. In this study, an effort has been made to evaluate the financial performance of the two major banks (one is NCB and another one is PCB) operating in Bangladesh. This evaluation has been done by using CAMEL Parameters, the latest model of financial analysis. Through this model, it is highlighted that the position of the banks under the study is sound and satisfactory so far as their capital adequacy, asset quality, management capability and liquidity is concerned.