Measuring Financial Performance Based on CAMEL: A Study on Selected Islamic Banks in Bangladesh

Authors

  • Mohammad Kamrul Ahsan Senior Lecturer, Department of Business Administration, Metropolitan University, Sylhet, BANGLADESH

DOI:

https://doi.org/10.18034/abr.v6i1.26

Keywords:

CAMEL Rating Analysis, Islamic Banks, Financial Performance, Bangladesh

Abstract

The aim of this paper is to analyze the financial performance of three selected Islamic Banks (Islami Bank Bangladesh Limited, Export Import Bank of Bangladesh Limited, Shahjalal Islami Bank Limited) over a period of eight years (2007-2014) in Bangladeshi banking sectors. For this reason, CAMEL Rating Analysis approach has been conducted and it is found that all the selected Islamic Banks are in strong position on their composite rating system. They are basically sound in every respect i.e., sound in capital adequacy, asset quality, management quality, earning capacity and liquidity conditions.

Downloads

Download data is not yet available.

References

Akkas, A. (1996). Relative Efficiency of the Conventional and Islamic Banking System in Financing Investment. PhD Dissertation, Dhaka University.

Barker, D., & Holdsworth, D.(1993). The Causes of Bank Failures in the 1980s. Research Paper No. 9325, Federal Reserve Bank of New York.

Barr, R. S., Killgo, K. A., Siems, T. F., and Zimmel, S. (2002).Evaluating the Productive Efficiency and Performance of U.S. Commercial Banks. Engineering Management, 28(8), p. 19.

Cole, R. A., & Gunther, J. (1998).Predicting Bank Failures: A Comparison of On-And Off-Site Monitoring Systems. Journal of Financial Services Research, 13(2), pp. 103-117.

Dar, H. A., & Presley, J. R. (2000). Lack of profit loss sharing in Islamic banking: Management and Control Imbalances. International Journal of Islamic Financial Services, 2(2), 3-18.

Deyoung, R., Flannery, M.J., Lang, W.W.,& Sorescu, S.M. (2001). The Information Content of Bank Exam Ratings and Subordinated Debt Prices. Journal of Money, Credit and Banking, Vol. 33, No. 4, p.900-925.

Doumpos, M., & Zopounidis,C. (2009). A Multicriteria Bank Rating System. European Working Group “Multiple Criteria Decision Aiding”, Spring, Series 3, No 19, p.17-19.

Godlewski, C. (2003). Bank’s Default Modelisation: An Application to Banks from Emerging Market Economies. Journal of Social Science Research Network, Vol.4, No.3, pp. 150-155.

Gupta, M., & Siabal, S.K. (2007), Profitability and Productivity in Banks a Comparative Study, Journal of Business Management, Vol.1, No.2, pp.137-152.

Hazzi, O.A. & Kilani, M.I.A. (2013). The Financial Performance Analysis of Islamic and Traditional Banks: Evidence from Malaysia. European Journal of Economics, Finance and Administrative Sciences, Issue:57, February 2013, ISSN: 1450-2275

Iqbal, M. J., (2012). Banking Sector's Performance In Bangladesh An Application Of Selected Camels Ratio, Asian Institute of Technology, School of Management, Thailand, Retrieved: 10 January 2016, from http://www.bankingandfinance.ait.asia/sites/default/files/report/report_jahidiqbal.pdf

Islami Bank Bangladesh Limited, Annual Report. (2007-2014). Retrieved Jan. 5, 2016, from http://www.islamibankbd.com/annual_report.php

Jaffar, M., & Manarvi, I. (2011). Performance Comparison of Islamic and Conventional Banks in Pakistan. Global Journal of Management and Business Research, 11(1), 59-66.

Kabir, M. A., & Dey, S. (2012) Performance Analysis through CAMEL Rating: A Comparative Study of Selected Private Commercial Banks in Bangladesh. Journal of Politics & Governance, Vol. 1, No. 2/3, September 2012, pp. 16-25.

Kader, J. M., Asarpota, A. J., & Al-Maghaireh, A. (2007). Comparative Financial Performance of Islamic Banks vis-à-vis Conventional Banks in the UAE. Proceeding on Annual Student Research Symposium and the Chancellor’s Undergraduate Research Award.

Khan, A. R. (2008). Bank Management- A Fund Emphasis. First edition, 2nd Print, P-59-60, Ruby publications, Dhaka.

Merchant, I. P. (2012). Performance analysis of banks using CAMEL approach, An Empirical study of Islamic Banks Versus Conventional Banks of GCC.

Najjar, O. K. (2008). Financial Analysis for Bank of Palestine & Jordan Ahli Bank (CAMEL Analysis). Social Science Research Network, [online] Retrieved: 06 January 2016, from http://ssrn.com/abstract=1329588

Nimalathasan, B. (2008). A Comparative Study of Financial Performance of Banking Sector in Bangladesh – An Application of CAMELS Rating System”, Annals of University of Bucharest, Economic and Administrative series, nr. 2 (2008), 141-152.

Nurazi, R., & Evans, M. (2005). ‘An Indonesian Study of the Use of CAMEL Ratios as Predictors of Bank Failure’, Journal of Economic and Social Policy, vol. 10, no. 1, pp. 1-23.

Patrick Y. Trautmann. (2006). "USAID-Funded Economic Governance II Project", p.45-49.

Piyu, Y. (1992). Data Envelopment Analysis & Commercial Bank Performance: A Primer with Application to Missouri Banks. Austin: IC2 Institute, University of Texas.

Rosly, S. A., & Bakar, M. A. A. (2003). Performance of Islamic and Mainstream Banks in Malaysia. International Journal of Social Economics, 30 (12), 1249-1265.

Said, M., & Saucier, P. (2003). Liquidity, Solvency, and Efficiency: An Empirical Analysis of the Japanese Bank’s Distress. University of Birmingham 20th Symposium on Banking and Monetary Economics

Saifullah, M. (2010). Superiority of Conventional Banks & Islamic Banks of Bangladesh:. International Journal of Economics and Finance Vol.2, No.3, August 2010.

Samad, A. (1999). Comparative Efficiency of the Islamic Bank Malaysia vis-à-vis Conventional Banks. IIUM Journal of Economics and Management, 7 (1), 1-25.

Samad, A., & Hassan, M. K. (2000). The performance of Malaysian Islamic Bank During 1984 -1997: An Explanatory Study. Thoughts on Economics, 10 (1&2), 7-26.

Samad, A. (2004). Performance of Interest Free Islamic Banks vis-à-vis Interest-Based Conventional Banks of Bahrain. IIUM Journal of Economics and Management, 12 (2), 1-25.

Sarker, M. A. A. (1999). Islamic Banking in Bangladesh: Performance, Problems and Prospects. International Journal of Islamic Financial Services. (Oct-Des), 1 (3).

Sarker, M. A. A. (2005).CAMEL Rating System in the Context of Islamic Banking: A Proposed ‘S’ for Shariah Framework. Journal of Islamic Economics and Finance, vol. 1, no.1, pp. 78-84.

Shahjalal Islami Bank Limited, Annual Report (2007-2014). Retrieved Jan. 5, 2016, from http://www.sjiblbd.com/Financial_Statements_2014.php

Siems, T. F., & Barr, R. S. (1998). Benchmarking the Productive Efficiency of U.S. Banks: Financial Industry Studies. Federal Reserve Bank of Dallas.

Tarawneh, M. (2006). A Comparison of Financial Performance in the Banking Sector: Some Evidence from Omani Commercial Banks. International Research Journal of Finance and Economics, Issue (3). ISSN 1450-2887

Verma, M. S. (2003), “Report of the Working Group on Restructuring Weak Public Sector Banks”, RBI Publications.

Vong, A., & Chan, H. (2009) “Determinants of Bank Profitability in Macau”, Macau Monetary Research Bulletin, 12, pp. 93-113

Wibowo, E., & Saptutyningsih, E. 2004. Analysis of Performance of Bank Muamalat Indonesia and Bank Syariah Mandiri. Journal of Economic Study, 5 (1), 20-25.

Widagdo, A. K., & Ika, S. R. (2007). The Interest Prohibition and Financial Performance of Islamic Banks: Indonesia Evidence. Paper presented in 19th Asian-pacificConference on International Accounting Issues. November 11-14, Kuala Lumpur, Malaysia.

Wirnkar, A. D., & Tanko, M. (2008), CAMELS and Banks Performance Evaluation: The Way Forward. Working Paper Series. Social Science Research Network. Retrieved Jan. 15, 2015, from http://ssrn.com/abstract=11

EXIM Bank Limited, Annual Report (2007-2014). Retrieved Jan. 5, 2016, from http://www.eximbankbd.com

Bangladesh Bank Annual Report. (2014). Retrieved Jan. 15, 2016, from http://www.bb.org.bd

-- 0 --

Downloads

Published

2016-04-26

How to Cite

Ahsan, M. K. (2016). Measuring Financial Performance Based on CAMEL: A Study on Selected Islamic Banks in Bangladesh. Asian Business Review, 6(1), Art. #7, pp. 47-56. https://doi.org/10.18034/abr.v6i1.26

Similar Articles

1-10 of 219

You may also start an advanced similarity search for this article.