Performance Evaluation Of Listed Commercial Banks In Botswana: The Camel Model
DOI:
https://doi.org/10.14738/abr.510.3783Abstract
The study evaluated the financial performance of three listed commercial banks in Botswana for the period 2011-2015 applying the CAMEL model. The study used the secondary data sourced from the annual reports of the listed banks. Results indicate that selected banks were highly leveraged and that their liquidity position was sound. The correlation analysis revealed that Earning per share had a significant positive correlation with liquidity ratio of total customer deposits to total assets and that leverage ratio was significantly negatively correlated to the ratio of equity capital to assets. Other CAMEL ratios were not significantly correlated to Earnings Per Share. The regression analysis showed that Capital adequacy, Asset quality, Earning ability and Managerial efficiency had no significant relationship with selected banks’ performance measured in terms of Earnings per share. On the other hand, the Liquidity position of these banks was found to be significantly related to the performance of selected banks at 5% significance level. The findings also indicated that, overall, the selected banks performed well during the study period in terms of most of the parameters of CAMEL model with adequate capital and assets when compared to benchmarks. The earning capacity of the selected banks was also on the increase. The findings of this study will be helpful to the management of selected banks in making appropriate managerial decisions.
References
Ahsan, M. K. (2016). Measuring financial performance based on CAMEL: A study on selected Islamic banks in Bangladesh. Asian Business Review, 6(1), 47-56.
Aspal, P. K., & Dhawan, S. (2016). Camels Rating Model For Evaluating Financial Performance of Banking Sector: A Theoretical Perspective. International Journal of System Modelling and Simulation (ISSN Online: 2518-0959), 1(3), 10-15.
Babar, H. Z., & Zeb, G. (2011). CAMELS rating system for banking industry in Pakistan. Unpublished Master Thesis). Pakistan: Umea School of Business.
Bank of Botswana (2015). Banking Supervision Annual Report 2015.Retrieved on 10/09/2017 from http://www.bankofbotswana.bw/assets/uploaded/BoB%20BSAR%202014%20Web.pdf
Bank of Botswana. Directory of Financial Institutions Operating in Botswana, June 2017.
Baral, K. J. (2005). Health check-up of commercial banks in the framework of CAMEL: A case study of joint venture banks in Nepal. Journal of Nepalese Business Studies, 2(1), 41-55.
Dash, Mihir and Das, Annyesha, A CAMELS Analysis of the Indian Banking Industry (July 14, 2009). Retrieved SRN: https://ssrn.com/abstract=1666900 or http://dx.doi.org/10.2139/ssrn.1666900
Desta, T. S. (2016). Financial Performance of “The Best African Banks”: A Comparative Analysis Through Camel Rating. Journal of Accounting and Management, 6(1), 1-20.
Durbin, J & Watson, G.S. (1951). Testing for Serial Correlation in Least Squares Regression. II Biometrika, 38(1/2), 159-177
Eakins, S., & Mishkin, F. (2012). Financial Markets and Institutions . Massachusetts: Pearson Education: Inc.
Ferrouhi, E. M. (2014). Moroccan Banks analysis using camel model. International Journal of Economics and Financial Issues, 4(3), 622-627.
Ghasempour, S., & Salami, M. (2016). Ranking Iranian Private Banks Based on the CAMELS Model Using the AHP Hybrid Approach and TOPSIS. International Journal of Academic Research in Accounting, Finance and Management Sciences, 6(4), 52-62.
Gupta, R.CA. (2014). An analysis of Indian public sector banks using CAMEL approach. IOSR Journal of Business and Management, 16(1), 94-102. http://businessjargons.com/camels-rating.html#ixzz4khrdQ3gp
Iheanyi, I. H. & Sotonye, I. (2017), Assessing the performance of Nigeria’s Bank Through the Camel Model, journal of Accounting and Financial Management, 3 (1), pp14-22, ISSN 2504-8856.
Ishaq AB, Karim A, Ahmed S, Zaheer A (2016) Evaluating Performance of Commercial Banks in Pakistan: “An Application of Camel Model”. J Bus Fin Aff 5: 169. doi:10.4172/2167-0234.1000169
Jha, S., & Hui, X. (2012). A comparison of financial performance of commercial banks: A case study of Nepal. African Journal of Business Management, 6(25), 7601.
Karthikeyan, P., & Shangari, B. (2014). Calibrating Financial Soundness among Selected Private Sector Banks in India by Using Camel Model. International Journal of Management Research and Reviews, 4(4), 449.
Kaur, J., Kaur, M., & Singh, S. (2015). Financial Performance Analysis of Selected Public Sector Banks: A Camel Model Approach. International Journal of Applied Business and Economic Research, 13, 4327-4348.
Keovongvichith, P. (2012). An analysis of the recent financial performance of the Laotian banking sector during 2005-2010. International Journal of Economics and Finance, 4(4), 148.
Lakew, T. B., Meniga, M., & Gebru, A. (2014). A study on financial performance of multipurpose co-operative unions in Tigray Region, Ethiopia. International Journal of Current Research, 6(11), 9810-9815.
Lakhtaria, N. J. (2013). A Comparative Study of the Selected Public Sector Banks through CAMEL Model. PARIPEX-Indian Journal of Research, 2(4), 37-38.
Liu, J., & Pariyaprasert, W. (2014). Determinants of Bank Performance: The Application of the CAMEL Model to Banks Listed in China’s Stock Exchanges from 2008 to 2011. AU-GSB e-JOURNAL, 7(2).
Masood, O., Ghauri, S.M.K., and Aktan, B. (2016). Predicting Islamic banks performance through CAMELS rating model. Banks and Bank Systems, 11(3).
Merchant, I. P. (2012). Empirical study of Islamic banks versus conventional banks of GCC. Global Journal of Management and Business Research, 12(20).
Moffat, B. (2009). The Banking Environment in Botswana: An Overview. Botswana Notes and Records, Botswana Society, (41), 95-103.
Mohiuddin, G. (2014). Use of CAMEL Model: A Study on Financial Performance of Selected Commercial Banks in Bangladesh. Universal Journal of Accounting and Finance, 2(5), 151-160.
Mousa, T.A. (2016). Measuring Financial Performance Based on CAMEL Rating Model on Islamic Banks in Jordan. Journal of Advanced Social Research, 6 (11), 1-10
Mulualem, G. (2015). Analysing Financial Performance of Commercial Banks in Ethiopia: CAMEL Approach (Doctoral dissertation, AAU).
Mulugeta, T. (2016). School of Commerce (Doctoral dissertation, Addis Ababa, University).
Myers, S. C., & Rajan, R. G. (1998). The paradox of liquidity. The Quarterly Journal of Economics, 113(3), 733-771.
Neill, J. (2003). Quantitative Research Design: Sampling & Measurement. Analysis of Professional Literature, Class 5, retrieved March 3rd, 2015, http://www. wilderdom. com/OEcourses/PROFLIT/Class5QuantitativeResearc hDesignSamplingMeasurement. htm# Sampling.
Reddy, D. M., & Prasad, K. (2011). Evaluating performance of regional rural banks: an application of CAMEL model. Researchers World, 2(4), 61.
Roman, A., & Sargu, A. C. (2013). Analysing the financial soundness of the commercial banks in Romania: an approach based on the camels framework. Procedia economics and finance, 6, 703-712
Rostami, Malihe (2015), CAMELS’ Analysis in Banking Industry. Global Journal of Engineering Science and Research Management, 2(11), 20-26
Rozzani, N., & Rahman, R. A. (2013). Camels and performance evaluation of banks in Malaysia: conventional versus Islamic. Journal of Islamic Finance and Business Research, 2(1), 36-45.
Saini, P., & Sindhu, J. (2014). Role of Commercial Bank in the Economic Development of India. International Journal of Engineering and Management Research, 4(1), 27-31.
Sathyamoorthi, C.R, Mogotsinyana Mapharing, Shabane Ndzinge, Gobona Tobedza, Lillian Wally-Dima Performance Analysis Using Camel Rating: A Comparative Study Of Listed Commercial Banks In Botswana: University of Botswana Faculty of Business Conference 2017: Transforming And Growing Economies Through Sustainable Business Innovation: July 2017
Statistics Botswana. September 2016. Selected Statistical Indicators 1966-2016, 16.
Tehrani, R., Mehragan, M. R., & Golkani, M. R. (2012). A model for evaluating financial performance of companies by data envelopment analysis: A case study of 36 corporations affiliated with a private organization. International Business Research, 5(8), 8-16.
Stephen, O. O., Apollos, E. A., & JE, A. (2016). The Camel Rating Based Assessment of the Performance of Nigerian Banks in the Post Consolidation Era (2005-2014). IIARD International Journal of Banking and Finance Research, 2 (2)
Trivedi, K. R. (2013). A camel model analysis of scheduled urban co-operative bank in Surat City–A case study of Surat people’s cooperative bank. IOSR Journal of Business and Management, 48-54.
Voon, S. P. (2013). Camel performance on domestic and foreign banks in Malaysia (Doctoral dissertation, University Malaysia Sarawak,(UNIMAS)).
Zedan, K. A., & Daas, G. (2017). Palestinian Banks Analysis Using CAMEL Model. International Journal of Economics and Financial Issues, 7(1).
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2017 Archives of Business Research
This work is licensed under a Creative Commons Attribution 4.0 International License.
