scholarly journals The Role of Using CAMELS Model in Analyzing the Factors Affecting the Performance of The Jordanian Commercial Banks (2014-2019)

2021 ◽  
Vol 17 (2) ◽  
pp. 3-11
Author(s):  
Senan Amer
Keyword(s):  
Quality Management ◽  
Commercial Banks ◽  
Capital Adequacy ◽  
Rate Of Return ◽  
Return On Assets ◽  
Return On Equity ◽  
Factors Affecting ◽  
Management Efficiency ◽  
Asset Quality ◽  
The Impact

In this study, the factors affecting the performance of Jordanian commercial banks have been analyzed using the elements of the CAMELS model, along with identifying the most important factors. The study targeted the impact of twenty Jordanian commercial banks on performance-; these banks were listed on the Amman Stock Exchange during the period of 2014-2019. The researcher used the Data Pooled Regression Method, due to its relevance to the nature of the data used in the study, where this method is used in the case of a time series and cross-sectorial data. The Rate of Return on Assets and the Rate of Return on Equity were used as the two variables on which the banks’ performance was measured. However, the independent variables included the CAMELS model elements which are capital adequacy, asset quality, management efficiency, earnings, liquidity, and sensitivity to market risks, in addition to macroeconomic variables, which include the rate of economic growth and the rate of inflation. The study concluded that capital adequacy, asset quality, management efficiency, and earnings are among the most important and most influential factors with regards to the Jordanian commercial banks, which - are is represented by the Rate of Return on Assets and the Rate of Return on Equity. Moreover, the study also concluded that it is possible to derive a miniature model from the CAMELS model called the CAME model, which has a great ability to explain and measure the performance of commercial banks in Jordan. Finally, the study recommended the Central Bank of Jordan to use the CAMELS model to evaluate Jordanian commercial banks.

scholarly journals The Impact of Non-Performing Loans, Return on Assets, Return on Equity, and Loan to Deposit Ratios on Minimum Capital Adequacy Requirement Based on Commercial Banks for Business Activities (BUKU) I 2015-2020

2021 ◽  
Vol 6 (6) ◽  
pp. 42-46
Author(s):  
Rano Rahadian ◽  
Dudi Permana
Keyword(s):  
Panel Data ◽  
Commercial Banks ◽  
Capital Adequacy ◽  
Return On Assets ◽  
Financial Reports ◽  
Return On Equity ◽  
Minimum Capital ◽  
The Impact

The purpose of this research is to gain an understanding of The Impact of Non-Performing Loans, Return on Assets, Return on Equity, and Loan to Deposit Ratios on Minimum Capital Adequacy Requirement Based on Commercial Banks for Business Activities (BUKU) I 2015-2020. The data of this research is obtained from financial reports published by each bank in 2015 to 2020 period. This research uses panel data processed using EViews software version 9.0. The results show that NPL negatively and insignificantly affects CAR. ROA gives positive and insignificant impacts toward CAR, while ROE causes negative and insignificant effects on CAR. In addition, there is positive and significant impacts on CAR caused by LDR.

scholarly journals The Impact of Capital Adequacy Ratio (CAR) on Islamic Banks’ Performance in Selected MENA Countries

2021 ◽  
pp. 116-133
Author(s):  
ADEL Z. A. ALNAJJAR ◽  
Anwar Hasan Abdullah Othman
Keyword(s):  
United Arab Emirates ◽  
Commercial Banks ◽  
Banking Sector ◽  
Capital Adequacy ◽  
Islamic Banks ◽  
Return On Assets ◽  
Return On Equity ◽  
Mena Countries ◽  
Capital Adequacy Ratio ◽  
The Impact

A strong capital adequacy ratio is crucial to a financial institution's success and helps it to survive any potential financial crisis. From Q1 2017 to Q4 2019, the influence of the Capital Adequacy Ratio (CAR) on the performance of Commercial Islamic Banks in MENA nations (Qatar, Oman, Bahrain, Kuwait, United Arab Emirates, Saudi Arabia, and Jordan) is examined. The performance measures utilized in this study are Return on Assets (ROA) and Return on Equity (ROE). The study's sample frame comprises all Islamic commercial banks in the designated MENA nations, with a sample size of 18 Islamic commercial banks. Panel data, fixed and random models, are applied in this study since there are multiple entities and time series. The findings of the study showed that the selected Islamic banks are committed to Capital Adequacy Ratio (CAR) which is defined under Basel III. This is considered the largest percentage regulated by the Basel Committee. The study also found that there is a statistically negative significant influence of CAR on both performance indicators ROE and ROA in the commercial Islamic banks in the selected MENA countries. The results of the study can be useful to a policymaker or decision-makers in the Islamic Banks industry. First, the research could be a reference to financial regulators such as central banks which may use the findings to provide regulation on optimal capital levels for local banks in terms of regulations, deregulations, and financial disruption. Next, the practice implications in the Islamic banking sector will provide them with insight as to how a bank’s capital influences its earnings. Hence, management can work towards attaining an optimal structure that maximizes their performance as well as identifying “best” and “worst” practices associated with capitalization levels.

Analysis of the Factors Affecting Bank Profitability: Evidence of Tanzania Commercial Banks

2021 ◽  
Vol 39 (8) ◽  
Author(s):  
Lisa Estrada Ngweshemi ◽  
Aliya Zhakanova Isiksal
Keyword(s):  
Commercial Banks ◽  
Banking Sector ◽  
Management Control ◽  
Capital Adequacy ◽  
Internal Variables ◽  
Factors Affecting ◽  
External Data ◽  
Private And Public ◽  
Asset Quality ◽  
The Impact

Only a successful and consistent banking sector can play the role of financial intermediary in the economy properly. As an intermediary in the modern economy, the bank must be profitable. The general aim of this study focuses on analyzing the factors that influence the profitability of private and public commercial banks in Tanzania. By the use of annual time series internal and external data for the period 2013 to 2019, and a quantitative approach methodology using GMM technique analysis of the impact of the selected determinants was made. The results from bank-internal variables comprised of four statistically significant variables which are capital adequacy, asset quality, loan composition, and cost efficiency while the rest is insignificant. Likewise, the macro-economic determining factors (growth domestic product (GDP) and inflation rate) were found to be non-significant. The empirical results have shown that profitability is more explained by bank-specific determinants that are directly controlled by the management than the macroeconomic factor variables which are beyond the reach of management control.

scholarly journals Faktor-Faktor yang Memengaruhi Profitabilitas Bank Umum Syariah di Indonesia

2020 ◽  
Vol 4 (3) ◽  
pp. 06
Author(s):  
Eliza Christabella Phuanerys ◽  
Yanuar Yanuar
Keyword(s):  
Commercial Banks ◽  
Financial Statements ◽  
Capital Adequacy ◽  
Debt Ratio ◽  
Return On Assets ◽  
Liquidity Management ◽  
Management Efficiency ◽  
Capital Adequacy Ratio ◽  
Operating Margin ◽  
Asset Quality

This study was conducted to analyze the effect of the Capital Adequacy, Asset Quality, Management Efficiency and Liquidity Management ratios on profitability proxied by bank Return On Assets (ROA), by analyzing the annual financial statements that have been published in 2013-2017. The variables used in analyzing the financial statements of Sharia Commercial Banks that are sampled are Asset Quality which is proxied by Non Performing Financing (NPF), Liquidity Management which is proxied by Financing to Debt Ratio (FDR), Management Efficiency proxied by Net Operating Margin (NOM), and Capital Adequacy proxied by Capital Adequacy Ratio (CAR). The sample in this study was 11 Islamic commercial banks for 5 years, namely 2013-2017. The results showed that Capital Adequacy, Asset Quality, and Liquidity Management significantly influenced the profitability of Islamic commercial banks. Whereas Management Efficiency does not affect the profitability of Islamic commercial banks. Based on these results, Sharia Commercial Banks in Indonesia must increase capital, reduce problematic financing by improving internal processes, and increase bank liquidity by increasing fundraising.

scholarly journals Applying the CAMEL model to assess performance of commercial banks: empirical evidence from Vietnam

2020 ◽  
Vol 15 (2) ◽  
pp. 177-186
Author(s):  
Anh Huu Nguyen ◽  
Hang Thu Nguyen ◽  
Huong Thanh Pham
Keyword(s):  
Financial Performance ◽  
Commercial Banks ◽  
Fixed Effects ◽  
Ordinary Least Squares ◽  
Capital Adequacy ◽  
Fixed Effects Model ◽  
Return On Equity ◽  
Net Interest Margin ◽  
Asset Quality ◽  
The Impact

The paper aims to investigate the impact of CAMEL components on the financial performance of commercial banks in Vietnam. Three econometric models are built using four CAMEL’s crucial indicators as independent variables (capital adequacy, asset quality, management effectiveness, bank liquidity) and return on assets (ROA), return on equity (ROE), and net interest margin (NIM) as proxies for commercial banks’ financial performance – dependent variables. The research sample includes 31 Vietnamese commercial banks over the 6-year period, from 2013 to 2018. The results show a better fit of the fixed effects model (FEM) in terms of the research methodology compared to the ordinary least squares (OLS) and random effects model (REM). It was found that capital adequacy, asset quality, liquidity and management efficiency affect the performance of Vietnamese commercial banks. Acknowledgement This research is funded by National Economics University (NEU), Hanoi, Vietnam. The authors thank anonymous referees for their contributions and the NEU for funding this research.

scholarly journals IMPACT OF LIQUIDITY MANAGEMENT ON COMMERCIAL BANKS PROFITABILITY IN KOSOVO DURING THE PERIOD 2011-2019

2021 ◽  
Author(s):  
Yllka Ahmeti ◽  
◽  
Ardi Ahmeti ◽  
Albina Kalimashi ◽  
◽  
...  
Keyword(s):  
Commercial Banks ◽  
Secondary Data ◽  
Capital Adequacy ◽  
Return On Assets ◽  
Liquidity Management ◽  
Return On Equity ◽  
Capital Adequacy Ratio ◽  
Data Regression ◽  
The Impact ◽  
The Relationship

Liquidity management and its impact on the profitability of commercial banks are two issues of particular importance in the further development of the business and at the same time two sources of concern for financial managers. For this reason, this study aims to determine the impact of changes in liquidity levels on the profitability of commercial banks in Kosovo. The study is based on secondary data for nine commercial banks in Kosovo over 9 years, respectively for the period from 2011 to 2019, taken from the audited annual statements of these financial institutions. The study measures the relationship between liquidity management and profitability and its impact on profitability. In order to process the data, regression analysis and correlation were used, while the findings determine whether there is a significant relationship between liquidity management and profitability in commercial banks in Kosovo. The current ratio, the quick ratio, the cash ratio and the capital adequacy ratio have been taken as liquidity indicators, while return on assets and return on equity are considered as profitability indicators.

scholarly journals The Impact of Corporate Governance on Profitability of Conventional Banks Operating in Pakistan

2020 ◽  
Vol 1 (4) ◽  
pp. 260-267
Author(s):  
Hafiz Muhammad Naveed ◽  
Shoaib Ali ◽  
Yao Hongxing ◽  
Saqib Altaf ◽  
Jan Muhammad Sohu
Keyword(s):  
Corporate Governance ◽  
Commercial Banks ◽  
Banking Sector ◽  
Board Independence ◽  
Return On Assets ◽  
Board Size ◽  
Return On Equity ◽  
Board Directors ◽  
Conventional Banks ◽  
The Impact

The key purpose of present research study to examine the association among corporate governance and profitability banks in developing counties. For such primary objective, annually based data collected from 2004 to 2016. The data taken from annual financial reports which issued by conventional banks.  We have used ADF (Augmented Dickey Fuller) test to examine the unit-root of variables. Moreover, the multiple linear regression utilized for hypothetical estimation. The results indicates that corporate governance and conventional banks profitability of Pakistan are bidirectional (positive-negative) associated to each other. In addition, the board size (Board Directors) is negatively associated with Return on assets and return on equity of banks. Similarly, the board independence (Insider-Outsider Board Directors) is positively influenced to return on assets and return on equity of conventional banks of Pakistan. The overall findings shows that board size and board independence are highly associated with return on equity than return on assets. Moreover, banking sector in developing countries the board size should contain on appropriate strength and acquire more professional and qualified staff. An optimal number of directors in a board size there is a need of commercial banks as to increase the profitability. To enhance the investors’ confidence with the bank there is also a need of the commercial banks to increases the board independency.

scholarly journals Analysis of the determinants of bank liquidity risk: The case of Islamic banks in the UAE

2021 ◽  
Vol 119 ◽  
pp. 01008
Author(s):  
Khadija Ichrak Addou ◽  
Afaf Bensghir
Keyword(s):  
Liquidity Risk ◽  
Multiple Linear Regression Model ◽  
Capital Adequacy ◽  
Annual Data ◽  
Islamic Banks ◽  
Mena Region ◽  
Return On Assets ◽  
Return On Equity ◽  
Risk Determinants ◽  
The Impact

This article aims to examine the principal parameters that impact the liquidity risk incurred by Islamic banks in the UAE. The study examines annual data from four Islamic banks in the UAE. The Data is extracted from their annual activity reports and financial results. A multiple linear regression model is used to assess the impact of six bank-specific variables (Return on Equity, return on assets, size of the bank, liquidity gaps, non-performing loans and capital adequacy ratio) on the liquidity risk of UAE Islamic banks. The designed model shows that ROA and NPL negatively impact the liquidity risk of the studied banks, while the other determinants, namely size, ROE, liquidity gaps and CAR contribute to the improvement of liquidity of UAE banks. Thus, our empirical results complement the existing studies related to the analysis of liquidity risk determinants incurred by Islamic banks operating in the MENA region, especially Emirati banks.

scholarly journals Bank Regulation and Level of Non performing Loans in Commercial Banks in Nakuru County Kenya

2020 ◽  
Vol 2 (2) ◽  
pp. 59-76
Author(s):  
Geoffrey Indeje Muhanji ◽  
Joseph Theuri
Keyword(s):  
Central Bank ◽  
Commercial Banks ◽  
Bank Regulation ◽  
Capital Adequacy ◽  
Liquidity Management ◽  
Macroeconomic Factors ◽  
Nonperforming Loans ◽  
Management Efficiency ◽  
Asset Quality ◽  
The Relationship

The study sought to determine the effect of bank regulation and level of nonperforming loans in commercial banks in Nakuru County Kenya. The specific objectives of the study were to explore the effect of capital adequacy on the level of nonperforming loans in commercial banks in Nakuru County Kenya, to find out the effect of asset quality on the level of nonperforming loans in commercial banks in Nakuru County Kenya, to evaluate the effect of liquidity management on the level of nonperforming loans in commercial banks in Nakuru County Kenya, to examine the effect of management efficiency on the level of nonperforming loans in commercial banks in Nakuru County Kenya and to determine the moderating effect of macroeconomic factors on the relationship between bank regulation and level of nonperforming loans. The literature review focused on portfolio theory of investment, capital asset pricing theory and the capital buffer theory of capital adequacy. The primary data was collected using structured questionnaires and secondary data was collected from the banking survey 2017 and central bank of Kenya annual supervisory reports. The study employed multiple linear regression analysis and the finding revealed that there exist a negative and statistically insignificant relationship between capital adequacy and non-performing loans. It was also observed that there exist a negative and statistically insignificant relationship between liquidity management and non-performing loans. On the other hand, there exist a positive and statistically significant relationship between asset quality and non-performing loans. Similarly, there exist a positive and statistically insignificant relationship between management efficiency and non-performing loans. Finally, the findings indicated that macroeconomic factors have moderating effect on the relationship between bank regulations and non-performing loans in commercial banks in Nakuru County. It was concluded that asset quality positively influences non-performing loans while management efficiency influence positively the non-performing loans. Similarly, liquidity management exerts a negative influence on non-performing loans. Finally, capital adequacy influence negatively on non-performing loans. The study recommends that Central Bank of Kenya should regularly access lending behavior to ensure compliance with banking regulations to avoid increasing incidences of non-performing loans. In addition, Central Bank of Kenya should closely monitor banks with deteriorating asset quality. Further, Central Bank of Kenya should strictly monitor the economic sector and ensure that banks provide adequate provisions for loans to mitigate risks of default. Furthermore, banks should maintain a good balance on deposits and lending out loans and adhere to regulators decisions about monetary policies. Finally, banks should increase the operational efficiency of operation weakness and improve corporate governance on the sanction of loans and Central Bank of Kenya should focus on managerial performance in order to detect banks with potential increases in non-performing loans.

Can Capital Structure Affect the Financial Performance of Banks in Turkey?

2018 ◽  
Author(s):  
Merve Tuncay
Keyword(s):  
Capital Structure ◽  
Financial Performance ◽  
Capital Adequacy ◽  
Return On Assets ◽  
Control Variables ◽  
Return On Equity ◽  
Independent Variables ◽  
Earnings Per Share ◽  
Asset Quality ◽  
The Capital Structure

<p>The aim of this study is to investigate the determinants of banks’ financial performance in terms of the capital structure. Annual financial statements of 11 banks traded in Borsa Istanbul are employed for the period of 2006-2016. Return on assets, return on equity and earnings per share are chosen for financial performance measures. The independent variables related to the capital structure are capital adequacy, equity-to-asset, and financial leverage ratios. In addition, macroeconomic variables and bank-specific variables are also considered as control variables for the analysis. The data are analyzed by the panel data regression analysis as it provides more informative finding and less multicollinearity among variables than time series and cross-sectional analyzes.</p><p>The Hausman test results indicate that the random effects model is appropriate for the whole dependent variables. According to the findings; while equity-to-asset ratio affects return on assets positively, amongst the control variables specific to firms, firm size, asset quality and asset growth variables have significant effects on return on assets. It is found no significant effect of independent variables on return on equity, however, it is seen that asset quality has a negative and significant effect. Inflation and interest rates have a significant effect on both variables. Finally, it is seen that equity-to-asset ratio has a positive and significant effect on earnings per share. Only the effect of asset quality on earnings per share is found to be significant among the control variables. Findings of the study are consistent with the previous studies. In addition, the M&amp;M views are not supported by the findings related to return on assets and earnings per share but the return on equity.</p>

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