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

Author

Listed:
  • 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)

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”.

Suggested Citation

  • Md. Rostam Ali & Md. Rakibuzzaman Ratul & Rushafa Tasnim Tisha & Md. Ashikul Islam, 2021. "A comparative performance evaluation of banking industry in Bangladesh: CAMEL rating approach," International Journal of Financial Engineering (IJFE), World Scientific Publishing Co. Pte. Ltd., vol. 8(01), pages 1-25, March.
    • Handle: RePEc:wsi:ijfexx:v:08:y:2021:i:01:n:s2424786320500528
    DOI: 10.1142/S2424786320500528
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