The document analyzes and compares the performance of public and private/foreign banks in India using the CAMELS framework from 2003-2008. It finds that private/foreign banks generally performed better than public sector banks on factors like capital adequacy, management soundness, and earnings/profitability. However, public sector banks performed better on factors like asset quality and liquidity. Overall, there was no significant difference found in the CAMELS ratings of public and private/foreign banks, though private/foreign banks showed a trend of improvement over time. The study suggests public sector banks need reforms to compete better.
This document is a research paper from the International Journal of Finance, Accounting and Economics that examines the effectiveness of market ratios in predicting financial distress among listed firms in Kenya. The paper includes an abstract, introduction, literature review, and statement of the problem sections. The introduction provides background on financial distress research and defines financial distress. The literature review covers liability management theory and shiftability theory of liquidity. The statement of the problem discusses previous related studies and notes that no significant studies have examined which market ratios are most effective at predicting financial distress in Kenyan listed companies.
Establishing the effectiveness of market ratios in predicting financial distr...oircjournals
This document is a research paper from the International Journal of Finance, Accounting and Economics that examines the effectiveness of market ratios in predicting financial distress among listed firms in Kenya. It provides background on financial distress research and discusses liability management theory and shiftability theory of liquidity as relevant frameworks. The paper aims to determine which market ratios are most statistically effective in predicting financial distress using data from 2011-2015 on the 62 listed companies in the Nairobi Securities Exchange.
Asset liability management and commercial banks profitability in ethiopiaAlexander Decker
The document examines the effect of asset liability management (ALM) on the profitability of commercial banks in Ethiopia. It uses a statistical cost accounting (SCA) model to analyze the relationship between banks' profitability, measured by return on assets (ROA), and their balance sheet items like loans, deposits and other assets/liabilities. The analysis finds that most assets positively impact profitability while liabilities generally have a negative effect. It also incorporates macroeconomic variables like GDP growth and inflation, finding GDP has a negative influence on bank profits. The study aims to help banks and policymakers better understand factors affecting bank performance in Ethiopia's developing financial system.
This document discusses private equity fundraising and market outlooks in emerging markets. It notes that emerging markets saw a 12% rise in private equity fundraising in 2008 despite economic conditions. However, some data shows funds are postponing final closings and development finance is focusing more on direct investing. The document discusses arguments for both increased emerging market risk and decreased risk due to factors like more resilient growth and less leverage used. It also analyzes differences among regions like Asia, CEE, MENA, and sub-Saharan Africa and notes trends like cheaper valuations and attractive deal flow arriving in 2010. In conclusion, it calls for paradigm shifts in the private equity business model regarding areas like fund structure, terms, valuation transparency, and operational
The Influencing Factors of Chinese Corporations’ LeverageIJAEMSJORNAL
This document analyzes the influencing factors of corporate debt leverage ratios in China using annual data from 2007 to 2018 for non-financial companies listed on China's A-share market. The empirical results find that:
1) Macroeconomic factors like GDP growth, money supply growth, and real interest rates have a significant impact on corporate debt leverage ratios.
2) Financial market factors such as the scale of social financing, financial institutions' leverage, and non-performing loan ratios also significantly impact corporate debt leverage ratios. Greater financial institution support for the real economy strengthens companies' ability to obtain debt financing.
3) Company-specific factors including profitability, size, growth, and liquidity significantly influence corporate debt
This document discusses a study that uses a simple screening method based on publicly available financial statements to select stocks from the Russell 2000 index that consistently outperform the index from 2001-2005. The screen generates an annualized excess return (alpha) of 7.58% over this period. The document estimates that widespread adoption of XBRL could reduce the cost of capital for small public companies by 1.75-3.03% by enabling easier analysis of financial statements, particularly for companies that currently lack analyst coverage. The returns to the simple screening method provide evidence that information from financial statements not fully incorporated into stock prices, and that XBRL could help reduce this inefficiency.
11.the impact of interest rate on profit among the united arab emirates uae s...Alexander Decker
The document summarizes a study that examined the impact of interest rates on the profits of small and medium enterprises (SMEs) in the United Arab Emirates (UAE). A questionnaire was administered to 20 employees of UAE SMEs to understand how interest rates affect company profits. The results showed that interest rates highly impact profits of SMEs in the UAE, with the highest mean scores relating to clear customer information about accounts and accurate advertising. The lowest mean scores related to avoiding increasing debt levels beyond repayment capacity and explicit credit approval policies. In conclusion, the study provides initial evidence that interest rates influence profits of SMEs in the UAE.
This document is a research paper from the International Journal of Finance, Accounting and Economics that examines the effectiveness of market ratios in predicting financial distress among listed firms in Kenya. The paper includes an abstract, introduction, literature review, and statement of the problem sections. The introduction provides background on financial distress research and defines financial distress. The literature review covers liability management theory and shiftability theory of liquidity. The statement of the problem discusses previous related studies and notes that no significant studies have examined which market ratios are most effective at predicting financial distress in Kenyan listed companies.
Establishing the effectiveness of market ratios in predicting financial distr...oircjournals
This document is a research paper from the International Journal of Finance, Accounting and Economics that examines the effectiveness of market ratios in predicting financial distress among listed firms in Kenya. It provides background on financial distress research and discusses liability management theory and shiftability theory of liquidity as relevant frameworks. The paper aims to determine which market ratios are most statistically effective in predicting financial distress using data from 2011-2015 on the 62 listed companies in the Nairobi Securities Exchange.
Asset liability management and commercial banks profitability in ethiopiaAlexander Decker
The document examines the effect of asset liability management (ALM) on the profitability of commercial banks in Ethiopia. It uses a statistical cost accounting (SCA) model to analyze the relationship between banks' profitability, measured by return on assets (ROA), and their balance sheet items like loans, deposits and other assets/liabilities. The analysis finds that most assets positively impact profitability while liabilities generally have a negative effect. It also incorporates macroeconomic variables like GDP growth and inflation, finding GDP has a negative influence on bank profits. The study aims to help banks and policymakers better understand factors affecting bank performance in Ethiopia's developing financial system.
This document discusses private equity fundraising and market outlooks in emerging markets. It notes that emerging markets saw a 12% rise in private equity fundraising in 2008 despite economic conditions. However, some data shows funds are postponing final closings and development finance is focusing more on direct investing. The document discusses arguments for both increased emerging market risk and decreased risk due to factors like more resilient growth and less leverage used. It also analyzes differences among regions like Asia, CEE, MENA, and sub-Saharan Africa and notes trends like cheaper valuations and attractive deal flow arriving in 2010. In conclusion, it calls for paradigm shifts in the private equity business model regarding areas like fund structure, terms, valuation transparency, and operational
The Influencing Factors of Chinese Corporations’ LeverageIJAEMSJORNAL
This document analyzes the influencing factors of corporate debt leverage ratios in China using annual data from 2007 to 2018 for non-financial companies listed on China's A-share market. The empirical results find that:
1) Macroeconomic factors like GDP growth, money supply growth, and real interest rates have a significant impact on corporate debt leverage ratios.
2) Financial market factors such as the scale of social financing, financial institutions' leverage, and non-performing loan ratios also significantly impact corporate debt leverage ratios. Greater financial institution support for the real economy strengthens companies' ability to obtain debt financing.
3) Company-specific factors including profitability, size, growth, and liquidity significantly influence corporate debt
This document discusses a study that uses a simple screening method based on publicly available financial statements to select stocks from the Russell 2000 index that consistently outperform the index from 2001-2005. The screen generates an annualized excess return (alpha) of 7.58% over this period. The document estimates that widespread adoption of XBRL could reduce the cost of capital for small public companies by 1.75-3.03% by enabling easier analysis of financial statements, particularly for companies that currently lack analyst coverage. The returns to the simple screening method provide evidence that information from financial statements not fully incorporated into stock prices, and that XBRL could help reduce this inefficiency.
11.the impact of interest rate on profit among the united arab emirates uae s...Alexander Decker
The document summarizes a study that examined the impact of interest rates on the profits of small and medium enterprises (SMEs) in the United Arab Emirates (UAE). A questionnaire was administered to 20 employees of UAE SMEs to understand how interest rates affect company profits. The results showed that interest rates highly impact profits of SMEs in the UAE, with the highest mean scores relating to clear customer information about accounts and accurate advertising. The lowest mean scores related to avoiding increasing debt levels beyond repayment capacity and explicit credit approval policies. In conclusion, the study provides initial evidence that interest rates influence profits of SMEs in the UAE.
Determinants of capital_structure_an_empR Ehan Raja
This document summarizes a research paper that investigates the determinants of capital structure for manufacturing firms in Pakistan. The paper reviews various capital structure theories and identifies firm-specific factors that may influence a firm's debt ratio. An empirical analysis is then conducted using data from 160 Pakistani manufacturing firms to determine which factors, such as profitability, size, liquidity, etc., are significantly related to the debt ratios of these firms. The findings indicate several factors predicted by trade-off theory, pecking order theory, and agency theory help explain the financing behavior of Pakistani firms, suggesting some universal applicability of capital structure models from Western settings.
Studio sulla capacità del modello predittivo del fallimenti Altman Z-Score ne...Giuseppe Fumagalli
An Overlook at Bankruptcy Prediction in Italy in 2016: An Application of the Altman’s Model on Failed Italian Manufacturing Companies In The 2016-First Quarter
Assessing the effect of liquidity on profitability of commercial banks in kenyaAlexander Decker
This document discusses factors that affect the profitability of commercial banks in Kenya. It provides background on the banking sector in Kenya and reviews various theories on factors that influence bank profitability, including market power theory, efficiency structure theory, and the Modigliani-Miller theorem. The study aimed to determine the effect of internal factors like liquidity on the profitability of commercial banks in Kenya. It found that liquidity has a statistically significant and positive relationship with bank profitability.
Enersys Case Study - MBA Strategic Mgmt ClassSam Bishop
This document provides a strategic analysis of Enersys, Inc., a major industrial battery manufacturer. It discusses the company's internal strengths such as its strong financial position and global production capacity, as well as weaknesses like overreliance on lead-acid batteries. External opportunities include new technologies and partnerships, while threats include new entrants and rising material costs. The document analyzes the industry, Enersys' products and markets, and provides recommendations to transform and incrementally improve the company's strategy.
SME Manufacturing Credit Risk Model Forecast Correctness and Result of ModelIOSR Journals
This document summarizes a study that analyzed financial data from 385 Thai small and medium enterprises (SMEs) to develop a logistic regression model for predicting financial distress. The study found statistically significant differences in liquidity, leverage, and profitability ratios between 37 financially distressed SMEs and 348 non-distressed SMEs. A logistic regression model using ratios related to liquidity, profitability, and financial leverage accurately classified the SMEs as financially distressed or not. The results indicate the model can help identify distressed SMEs and assist policymakers, business owners, and consultants in developing strategies to support the sustainable growth of Thai SMEs and industries.
Profitability Determinants of Go-Public Bank in Indonesia: Empirical Evidenc...inventionjournals
International Journal of Business and Management Invention (IJBMI) is an international journal intended for professionals and researchers in all fields of Business and Management. IJBMI publishes research articles and reviews within the whole field Business and Management, new teaching methods, assessment, validation and the impact of new technologies and it will continue to provide information on the latest trends and developments in this ever-expanding subject. The publications of papers are selected through double peer reviewed to ensure originality, relevance, and readability. The articles published in our journal can be accessed online
SME development, constraints, credit risk & islamic banking solutionsMace Abdullah
This analytic paper examines the status of small and medium sized enterprises (SME) worldwide, provides theoretical information and explores issues regarding their development, constraints and credit risk. SME have been heralded worldwide as being the economic “engine” of economic development. Certainly, from an Islamic finance perspective, the development of SME represents a propitious opportunity, a vital step towards an epistemological response to criticism of Islamic finance and should play an indispensible role in forging a more robust Islamic capital market. Yet, SME face persistent identifiable obstacles to growth and development. This paper focuses on SME development, particularly as it relates to the so-called “credit gap” and the concomitant credit risk. The SME “credit gap” is pervasive worldwide; particularly so in emerging economies. Accordingly, this paper analyzes: the determinants and drivers of SME development; constraints on SME development; the SME “credit gap” and concomitant credit risk; and the role Islamic banking can play in meeting the challenge of SME development.
Evaluation of the Development and Performance of Selected GCC and Non-GCC St...Mace Abdullah
This paper compares and contrasts the stock markets for countries of comparable size and development as and between the GCC and non-GCC countries. The paper implicitly observes what may be considered strengths and weakness as and between markets dominated by Islamic Finance principles and those that are more or less conventionally oriented.
Financial Distress Prediction With Altman Z-Score And Effect On Stock Price: ...inventionjournals
: This study aimed to obtain empirical evidence about the state of financial distress prediction using the Altman Z-score and ratio-ratio test Z-score in influencing the price of shares in the chemical subsectors listed in Indonesia Stock Exchange 2009-2014 period. The samples were determined by purposive sampling, while data processing using Microsoft Excel, and SPSS. Financial distress only occurs in ETWA company in 2014 in the category of bankruptcy. Effect of a Z-score to the stock price is significantly 0.004 and ratio-ratio of the Altman Z score is working capital to total assets have no significant effect amounted to 0,085, retained earnings to total assets have no significant effect amounted to 0,478, EBIT to total assets have a significant influence amounted to 0,016, and the book value of equity to book value of total debt had no significant effect of 0.078. Contribution ratio-ratio Altman Z-score of 48.6% to the stock price. In conclusion, the financial distress that are in reasonably good condition. Z-score can be used to predict stock prices, and ratios of Z-score only ebit to total assets can significantly affect stock prices partially.
This study brings to an academia table the discussion on whether investment incentives are a
motivator or a gift and also explores the moderating effects of Investors‟ Perceptions on Stock market
Performance. By use of key word characters the search initially identified 93 published and unpublished research
papers and after a tentative scrutiny, 66 papers were selected in a random sampling manner in order to give the
birth to this discussion paper. Exploratory research design was used. The key objective of this article was to
investigate on the question as to whether incentives are a gift or a motivator. The study findings reveal than
investor perceptions affects stock market performance more than incentives do. The paper concludes that the
availability, adequacy, and timeliness of relevant information about marketable securities are important for both
pricing efficiency and market confidence. Investment incentives work well in an ideal world to promote
investment while investors‟ perceptions are relevant in the real world. Hence, stock market incentives were
concluded as being a gift and not a motivator for investors to make investment decisions at the stock market.
Review on Research paper 'Determinants of Financial Performance of Commercial...Saumya Singh
This study examined the determinants of financial performance of commercial banks in Kenya from 2001-2010. It found that bank-specific factors like capital adequacy, asset quality, and management efficiency significantly impacted performance measures like return on assets and equity. However, liquidity and macroeconomic variables did not have significant effects. Additionally, the study found that ownership structure (domestic vs. foreign banks) did not moderate financial performance. Thus, internal bank management decisions were more important determinants of performance than external macroeconomic conditions.
Altman Bankruptcy Prediction Model and Corporate Governance An Empirical Stud...ijtsrd
The implications of the Altman bankruptcy prediction model on deposit money banks corporate governance in Nigeria are the subject of this research. The majority of these studies were undertaken in both Nigeria and other nations, and just a few of the Nigerian studies conducted their research in corporate firms other than the banking sector, and only a few of these banking sector studies ended in 2013. Furthermore, there is a scarcity of research on bankruptcy and corporate governance in Nigeria. Meanwhile, considering the dynamic nature of Nigerian deposit money banks, all previous research relate to a specific time span. As a result, the impact of the Altman bankruptcy prediction model on the corporate governance of Nigerian deposit money institutions was investigated in this study. The study aims to determine the impact of the Altman bankruptcy forecasting model on board independence in Nigerian deposit money banks, as well as if the model has an impact on board size in Nigerian deposit money banks. It was decided to use an ex post facto study design. From a population of 22 banks in Nigeria, a sample size of 9 deposit money banks was chosen. Data was gathered from the sampled banks annual reports and accounts for the years 2009 to 2019. With the help of E View 9.0, the study used regression analysis to examine the hypotheses. The Altman bankruptcy forecasting model has a beneficial influence on board independence however this effect is not significantly significant on deposit money institutions in Nigeria, according to the data reviewed. It was also discovered that while the Altman bankruptcy predicting model has a positive effect on board size, this effect is not statistically significant in Nigerian deposit money banks. Ezejiofor, Raymond A | Okerekeoti, Chinedu U "Altman Bankruptcy Prediction Model and Corporate Governance: An Empirical Study of Nigerian Banks" Published in International Journal of Trend in Scientific Research and Development (ijtsrd), ISSN: 2456-6470, Volume-5 | Issue-6 , October 2021, URL: https://www.ijtsrd.com/papers/ijtsrd46387.pdf Paper URL : https://www.ijtsrd.com/management/accounting-and-finance/46387/altman-bankruptcy-prediction-model-and-corporate-governance-an-empirical-study-of-nigerian-banks/ezejiofor-raymond-a
Profitability determinants and the impact of global financial crisis a panel...Alexander Decker
This document summarizes a research study that examined the determinants of profitability for Islamic banks in Malaysia from 2007 to 2010 using panel data analysis. The study found that overhead expenses, loans, deposits, technical efficiency, and bank size had a positive significant effect on profitability, while inflation had a negative effect. Capital and reserves, liquidity, bank age, GDP growth, GDP per capita, and concentration ratio did not significantly impact profitability. The study also found that Islamic bank profitability was negatively affected by the 2008 global financial crisis.
This document summarizes a research article that analyzes the performance of mutual fund schemes in India. It discusses how the mutual fund industry in India grew significantly in the pre-recession period from 2006-2007 due to overall GDP growth and positive investor sentiment. However, during the recession period of 2008-2009, the industry witnessed a decline as markets fell. After the recession, the industry struggled to regain its previous growth. The document also examines the use of principal component analysis to identify relevant variables that influence mutual fund performance.
International Journal of Business and Management Invention (IJBMI) is an international journal intended for professionals and researchers in all fields of Business and Management. IJBMI publishes research articles and reviews within the whole field Business and Management, new teaching methods, assessment, validation and the impact of new technologies and it will continue to provide information on the latest trends and developments in this ever-expanding subject. The publications of papers are selected through double peer reviewed to ensure originality, relevance, and readability. The articles published in our journal can be accessed online
Effect of Cash Management on The Financial Performance of Cooperative Banks i...journal ijrtem
This paper analyses the effect of cash management on the financial performance of cooperatives
banks in Rwanda. A descriptive research design was used. The population comprised of 148 employees of ZIGMA
CSS from which a sample of 108 employees was determined using Solvirn and Yemen’s formula. Data was
collected from both primary and secondary sources using questionnaires and document analysis. Data was
presented using frequency tables from which analysis was made. A multi regression analysis was used to analyse
relationship between the variables. The results from the survey revealed that ZIGMA CSS uses various cash
management techniques in the cash management. The results further revealed a strong relationship between cash
management and financial performance of ZIGMA CSS. The study concludes that cash management is a key tool
in the financial management of the banks since cash forms the biggest asset of the bank. Cooperatives banks
should ensure that they develop policies in effective cash management.
ISSN 2029-9370 (Print), ISSN 2351-6542 (Online). Regional FoRmation and development StudieS, no. 2 (19)
7
L e v e r a g e C o n t r o L a n d Q u a n t i t a t i v e
M a n a g e M e n t : t h e a n a L y s i s o f a M p L i f i C a t i o n
e f f e C t o n f i n a n C i a L s y s t e M
Haidong Feng1, Kaspars Viksne2, Andrea Lunardi3
University of Latvia (Latvia)1,2, University of Verona (Italy)3
ABSTRACT
Maintaining the stability of financial leverage is a task in macro-economic management and also a challenge to be faced. Financial
amplification characteristics dominate financial leverage system with low risk of capabilities, and the efficiency of this ability has
two-sides results and proposes a lot of risks, however, most researchers have not found the best ways to solve this problem. There-
fore, taking positive measures to strengthen the management of the financial system leverage feature becomes very important. In
this paper, authors use comparative study and data analysis to illustrate the main problems of financial system leverage, the effect of
leverage amplification characteristics, bi-amplified comparative analysis of profit and loss, and bi-amplification characteristics of the
risk analysis. Meanwhile, based on five classified management methods, authors put forward countermeasures to the management
of leverage properties in financial system.
KEYWORDS: Financial System, Leverage Characteristic, Leverage Category Management.
JEL CODE: G10
DOI: http://dx.doi.org/10.15181/rfds.v19i2.1279
I n t r o d u c t i o n
Contemporary evolution of the financial system in the outstanding performance, that first developed rap-
idly, is mixed. This situation is largely due to its real economic leverage amplification characteristics. It is the
leverage performance of the financial system, so it has a small risk of capacity, particularly under the effect
of high leverage efforts that people often anticipate. Two financial derivatives, for example, under ordinary
circumstances investors only need to pay a small deposit that can carry a huge amount of the transactions.
Primarily, it can make the money work more efficiently and avoid risks to achieve hedge of gaining huge
profit. Furthermore, the financial derivative transactions or probability also contain a huge risk of losing oc-
curs when the amount of loss is correspondingly expanded several times, and its ripple effect will be spread
like butterfly effect, and it will be difficult to control it. One of the reasons of the global financial crisis is that
five largest investment banks of U.S bankrupted at the same time.
In the current years, financial leverage plays an important role in the financial system. Also financial
leverage must be used appropriately to get far away from the crisis. Both macroeconomic regulators and
1 Haidong Feng – University of Latvia, MsC. Scientific intrests: Marketing
E-mail: [email protected]zu.edu.cn
Tel. +371 253 367 87
2 Kas ...
This document is the index page of a seminar report on analyzing the performance of public sector banks in India using the CAMEL framework. The index lists the following chapter titles: introduction, literature review, history of the CAMEL framework, industry profile of the banking sector in India, description of the CAMEL model, and conclusions. It provides a brief overview of the topics to be discussed in each chapter, including definitions of key terms like scheduled commercial banks. The industry profile section gives a high-level history of banking in India from 1786 to present day and describes the three phases of development and nationalization of banks.
Determinants of capital_structure_an_empR Ehan Raja
This document summarizes a research paper that investigates the determinants of capital structure for manufacturing firms in Pakistan. The paper reviews various capital structure theories and identifies firm-specific factors that may influence a firm's debt ratio. An empirical analysis is then conducted using data from 160 Pakistani manufacturing firms to determine which factors, such as profitability, size, liquidity, etc., are significantly related to the debt ratios of these firms. The findings indicate several factors predicted by trade-off theory, pecking order theory, and agency theory help explain the financing behavior of Pakistani firms, suggesting some universal applicability of capital structure models from Western settings.
Studio sulla capacità del modello predittivo del fallimenti Altman Z-Score ne...Giuseppe Fumagalli
An Overlook at Bankruptcy Prediction in Italy in 2016: An Application of the Altman’s Model on Failed Italian Manufacturing Companies In The 2016-First Quarter
Assessing the effect of liquidity on profitability of commercial banks in kenyaAlexander Decker
This document discusses factors that affect the profitability of commercial banks in Kenya. It provides background on the banking sector in Kenya and reviews various theories on factors that influence bank profitability, including market power theory, efficiency structure theory, and the Modigliani-Miller theorem. The study aimed to determine the effect of internal factors like liquidity on the profitability of commercial banks in Kenya. It found that liquidity has a statistically significant and positive relationship with bank profitability.
Enersys Case Study - MBA Strategic Mgmt ClassSam Bishop
This document provides a strategic analysis of Enersys, Inc., a major industrial battery manufacturer. It discusses the company's internal strengths such as its strong financial position and global production capacity, as well as weaknesses like overreliance on lead-acid batteries. External opportunities include new technologies and partnerships, while threats include new entrants and rising material costs. The document analyzes the industry, Enersys' products and markets, and provides recommendations to transform and incrementally improve the company's strategy.
SME Manufacturing Credit Risk Model Forecast Correctness and Result of ModelIOSR Journals
This document summarizes a study that analyzed financial data from 385 Thai small and medium enterprises (SMEs) to develop a logistic regression model for predicting financial distress. The study found statistically significant differences in liquidity, leverage, and profitability ratios between 37 financially distressed SMEs and 348 non-distressed SMEs. A logistic regression model using ratios related to liquidity, profitability, and financial leverage accurately classified the SMEs as financially distressed or not. The results indicate the model can help identify distressed SMEs and assist policymakers, business owners, and consultants in developing strategies to support the sustainable growth of Thai SMEs and industries.
Profitability Determinants of Go-Public Bank in Indonesia: Empirical Evidenc...inventionjournals
International Journal of Business and Management Invention (IJBMI) is an international journal intended for professionals and researchers in all fields of Business and Management. IJBMI publishes research articles and reviews within the whole field Business and Management, new teaching methods, assessment, validation and the impact of new technologies and it will continue to provide information on the latest trends and developments in this ever-expanding subject. The publications of papers are selected through double peer reviewed to ensure originality, relevance, and readability. The articles published in our journal can be accessed online
SME development, constraints, credit risk & islamic banking solutionsMace Abdullah
This analytic paper examines the status of small and medium sized enterprises (SME) worldwide, provides theoretical information and explores issues regarding their development, constraints and credit risk. SME have been heralded worldwide as being the economic “engine” of economic development. Certainly, from an Islamic finance perspective, the development of SME represents a propitious opportunity, a vital step towards an epistemological response to criticism of Islamic finance and should play an indispensible role in forging a more robust Islamic capital market. Yet, SME face persistent identifiable obstacles to growth and development. This paper focuses on SME development, particularly as it relates to the so-called “credit gap” and the concomitant credit risk. The SME “credit gap” is pervasive worldwide; particularly so in emerging economies. Accordingly, this paper analyzes: the determinants and drivers of SME development; constraints on SME development; the SME “credit gap” and concomitant credit risk; and the role Islamic banking can play in meeting the challenge of SME development.
Evaluation of the Development and Performance of Selected GCC and Non-GCC St...Mace Abdullah
This paper compares and contrasts the stock markets for countries of comparable size and development as and between the GCC and non-GCC countries. The paper implicitly observes what may be considered strengths and weakness as and between markets dominated by Islamic Finance principles and those that are more or less conventionally oriented.
Financial Distress Prediction With Altman Z-Score And Effect On Stock Price: ...inventionjournals
: This study aimed to obtain empirical evidence about the state of financial distress prediction using the Altman Z-score and ratio-ratio test Z-score in influencing the price of shares in the chemical subsectors listed in Indonesia Stock Exchange 2009-2014 period. The samples were determined by purposive sampling, while data processing using Microsoft Excel, and SPSS. Financial distress only occurs in ETWA company in 2014 in the category of bankruptcy. Effect of a Z-score to the stock price is significantly 0.004 and ratio-ratio of the Altman Z score is working capital to total assets have no significant effect amounted to 0,085, retained earnings to total assets have no significant effect amounted to 0,478, EBIT to total assets have a significant influence amounted to 0,016, and the book value of equity to book value of total debt had no significant effect of 0.078. Contribution ratio-ratio Altman Z-score of 48.6% to the stock price. In conclusion, the financial distress that are in reasonably good condition. Z-score can be used to predict stock prices, and ratios of Z-score only ebit to total assets can significantly affect stock prices partially.
This study brings to an academia table the discussion on whether investment incentives are a
motivator or a gift and also explores the moderating effects of Investors‟ Perceptions on Stock market
Performance. By use of key word characters the search initially identified 93 published and unpublished research
papers and after a tentative scrutiny, 66 papers were selected in a random sampling manner in order to give the
birth to this discussion paper. Exploratory research design was used. The key objective of this article was to
investigate on the question as to whether incentives are a gift or a motivator. The study findings reveal than
investor perceptions affects stock market performance more than incentives do. The paper concludes that the
availability, adequacy, and timeliness of relevant information about marketable securities are important for both
pricing efficiency and market confidence. Investment incentives work well in an ideal world to promote
investment while investors‟ perceptions are relevant in the real world. Hence, stock market incentives were
concluded as being a gift and not a motivator for investors to make investment decisions at the stock market.
Review on Research paper 'Determinants of Financial Performance of Commercial...Saumya Singh
This study examined the determinants of financial performance of commercial banks in Kenya from 2001-2010. It found that bank-specific factors like capital adequacy, asset quality, and management efficiency significantly impacted performance measures like return on assets and equity. However, liquidity and macroeconomic variables did not have significant effects. Additionally, the study found that ownership structure (domestic vs. foreign banks) did not moderate financial performance. Thus, internal bank management decisions were more important determinants of performance than external macroeconomic conditions.
Altman Bankruptcy Prediction Model and Corporate Governance An Empirical Stud...ijtsrd
The implications of the Altman bankruptcy prediction model on deposit money banks corporate governance in Nigeria are the subject of this research. The majority of these studies were undertaken in both Nigeria and other nations, and just a few of the Nigerian studies conducted their research in corporate firms other than the banking sector, and only a few of these banking sector studies ended in 2013. Furthermore, there is a scarcity of research on bankruptcy and corporate governance in Nigeria. Meanwhile, considering the dynamic nature of Nigerian deposit money banks, all previous research relate to a specific time span. As a result, the impact of the Altman bankruptcy prediction model on the corporate governance of Nigerian deposit money institutions was investigated in this study. The study aims to determine the impact of the Altman bankruptcy forecasting model on board independence in Nigerian deposit money banks, as well as if the model has an impact on board size in Nigerian deposit money banks. It was decided to use an ex post facto study design. From a population of 22 banks in Nigeria, a sample size of 9 deposit money banks was chosen. Data was gathered from the sampled banks annual reports and accounts for the years 2009 to 2019. With the help of E View 9.0, the study used regression analysis to examine the hypotheses. The Altman bankruptcy forecasting model has a beneficial influence on board independence however this effect is not significantly significant on deposit money institutions in Nigeria, according to the data reviewed. It was also discovered that while the Altman bankruptcy predicting model has a positive effect on board size, this effect is not statistically significant in Nigerian deposit money banks. Ezejiofor, Raymond A | Okerekeoti, Chinedu U "Altman Bankruptcy Prediction Model and Corporate Governance: An Empirical Study of Nigerian Banks" Published in International Journal of Trend in Scientific Research and Development (ijtsrd), ISSN: 2456-6470, Volume-5 | Issue-6 , October 2021, URL: https://www.ijtsrd.com/papers/ijtsrd46387.pdf Paper URL : https://www.ijtsrd.com/management/accounting-and-finance/46387/altman-bankruptcy-prediction-model-and-corporate-governance-an-empirical-study-of-nigerian-banks/ezejiofor-raymond-a
Profitability determinants and the impact of global financial crisis a panel...Alexander Decker
This document summarizes a research study that examined the determinants of profitability for Islamic banks in Malaysia from 2007 to 2010 using panel data analysis. The study found that overhead expenses, loans, deposits, technical efficiency, and bank size had a positive significant effect on profitability, while inflation had a negative effect. Capital and reserves, liquidity, bank age, GDP growth, GDP per capita, and concentration ratio did not significantly impact profitability. The study also found that Islamic bank profitability was negatively affected by the 2008 global financial crisis.
This document summarizes a research article that analyzes the performance of mutual fund schemes in India. It discusses how the mutual fund industry in India grew significantly in the pre-recession period from 2006-2007 due to overall GDP growth and positive investor sentiment. However, during the recession period of 2008-2009, the industry witnessed a decline as markets fell. After the recession, the industry struggled to regain its previous growth. The document also examines the use of principal component analysis to identify relevant variables that influence mutual fund performance.
International Journal of Business and Management Invention (IJBMI) is an international journal intended for professionals and researchers in all fields of Business and Management. IJBMI publishes research articles and reviews within the whole field Business and Management, new teaching methods, assessment, validation and the impact of new technologies and it will continue to provide information on the latest trends and developments in this ever-expanding subject. The publications of papers are selected through double peer reviewed to ensure originality, relevance, and readability. The articles published in our journal can be accessed online
Effect of Cash Management on The Financial Performance of Cooperative Banks i...journal ijrtem
This paper analyses the effect of cash management on the financial performance of cooperatives
banks in Rwanda. A descriptive research design was used. The population comprised of 148 employees of ZIGMA
CSS from which a sample of 108 employees was determined using Solvirn and Yemen’s formula. Data was
collected from both primary and secondary sources using questionnaires and document analysis. Data was
presented using frequency tables from which analysis was made. A multi regression analysis was used to analyse
relationship between the variables. The results from the survey revealed that ZIGMA CSS uses various cash
management techniques in the cash management. The results further revealed a strong relationship between cash
management and financial performance of ZIGMA CSS. The study concludes that cash management is a key tool
in the financial management of the banks since cash forms the biggest asset of the bank. Cooperatives banks
should ensure that they develop policies in effective cash management.
ISSN 2029-9370 (Print), ISSN 2351-6542 (Online). Regional FoRmation and development StudieS, no. 2 (19)
7
L e v e r a g e C o n t r o L a n d Q u a n t i t a t i v e
M a n a g e M e n t : t h e a n a L y s i s o f a M p L i f i C a t i o n
e f f e C t o n f i n a n C i a L s y s t e M
Haidong Feng1, Kaspars Viksne2, Andrea Lunardi3
University of Latvia (Latvia)1,2, University of Verona (Italy)3
ABSTRACT
Maintaining the stability of financial leverage is a task in macro-economic management and also a challenge to be faced. Financial
amplification characteristics dominate financial leverage system with low risk of capabilities, and the efficiency of this ability has
two-sides results and proposes a lot of risks, however, most researchers have not found the best ways to solve this problem. There-
fore, taking positive measures to strengthen the management of the financial system leverage feature becomes very important. In
this paper, authors use comparative study and data analysis to illustrate the main problems of financial system leverage, the effect of
leverage amplification characteristics, bi-amplified comparative analysis of profit and loss, and bi-amplification characteristics of the
risk analysis. Meanwhile, based on five classified management methods, authors put forward countermeasures to the management
of leverage properties in financial system.
KEYWORDS: Financial System, Leverage Characteristic, Leverage Category Management.
JEL CODE: G10
DOI: http://dx.doi.org/10.15181/rfds.v19i2.1279
I n t r o d u c t i o n
Contemporary evolution of the financial system in the outstanding performance, that first developed rap-
idly, is mixed. This situation is largely due to its real economic leverage amplification characteristics. It is the
leverage performance of the financial system, so it has a small risk of capacity, particularly under the effect
of high leverage efforts that people often anticipate. Two financial derivatives, for example, under ordinary
circumstances investors only need to pay a small deposit that can carry a huge amount of the transactions.
Primarily, it can make the money work more efficiently and avoid risks to achieve hedge of gaining huge
profit. Furthermore, the financial derivative transactions or probability also contain a huge risk of losing oc-
curs when the amount of loss is correspondingly expanded several times, and its ripple effect will be spread
like butterfly effect, and it will be difficult to control it. One of the reasons of the global financial crisis is that
five largest investment banks of U.S bankrupted at the same time.
In the current years, financial leverage plays an important role in the financial system. Also financial
leverage must be used appropriately to get far away from the crisis. Both macroeconomic regulators and
1 Haidong Feng – University of Latvia, MsC. Scientific intrests: Marketing
E-mail: [email protected]zu.edu.cn
Tel. +371 253 367 87
2 Kas ...
This document is the index page of a seminar report on analyzing the performance of public sector banks in India using the CAMEL framework. The index lists the following chapter titles: introduction, literature review, history of the CAMEL framework, industry profile of the banking sector in India, description of the CAMEL model, and conclusions. It provides a brief overview of the topics to be discussed in each chapter, including definitions of key terms like scheduled commercial banks. The industry profile section gives a high-level history of banking in India from 1786 to present day and describes the three phases of development and nationalization of banks.
Assessment of performance of public sector banks under camel frameworkHIMANI PADIA
This document provides an overview of the banking system in India and discusses performance evaluation methods. It begins with an introduction to the important role of banks in economies and the need to regularly assess bank performance. The CAMEL model is then introduced as a commonly used framework to evaluate the capital adequacy, asset quality, management, earnings, and liquidity of financial institutions. The history and development of the CAMEL framework is outlined, noting its origins in the US and adoption by other international organizations. Previous studies that have applied the CAMEL model to analyze various banks are also summarized. The chapter concludes by profiling the banking industry and landscape in India.
A study on financial performance of vijaya bankDattu MudhiRaj
This document discusses analyzing the financial performance of Vijaya Bank through ratio analysis. It begins by defining financial analysis and its objectives. Ratio analysis is identified as a useful technique for evaluating various financial aspects of a company. The study focuses on analyzing Vijaya Bank's profitability, asset utilization, liquidity, and financial capabilities over three financial years using data collected from annual reports and the bank's website. The objectives are to evaluate Vijaya Bank's financial performance using ratio analysis and suggest improvements. Secondary research on previous bank performance studies is also reviewed.
This document analyzes the performance and competitive position of state-owned commercial banks in Bangladesh from 2009-2012. It finds that while these banks have achieved stable growth in deposits, loans, and branches, they have struggled to improve key financial metrics like net profit, returns, and reducing non-performing loans. Trend analysis found positive growth in some areas but negative trends or low correlation for other financial indicators. The study aims to evaluate these banks' performance, conduct competitive analysis, and provide recommendations for improvement. Secondary data is used from annual reports and other sources to analyze metrics and compare the four largest state-owned commercial banks in Bangladesh.
This document summarizes a study analyzing the financial performance of selected public and joint venture commercial banks in Nepal from 2015 to 2019 using the CAMEL rating system. CAMEL assesses banks based on capital adequacy, asset quality, management efficiency, earnings quality, and liquidity. The study found that Himalayan Bank maintained higher capital levels while Everest Bank had higher quality loans and earnings efficiency. Standard Chartered Bank had stronger management efficiency while Agricultural Development Bank had higher liquidity. Statistical tests showed no significant differences between public and joint venture banks in capital adequacy, earnings, and liquidity, but significant differences in asset quality and management quality.
This document introduces a new Global Financial Development Database that benchmarks the financial systems of 205 economies from 1960 to 2010. The database measures four characteristics of financial institutions and markets: (1) size (financial depth), (2) access, (3) efficiency, and (4) stability. It uses these measures to characterize and compare financial systems across countries and over time, as well as examine the relationship between financial systems and policies. The analysis presented in the database and document provide an empirical framework for describing the multi-dimensional nature of financial systems around the world.
This document discusses corporate governance, diversification, and risk management in commercial banks of Ethiopia. It examines the effect of corporate governance attributes and bank characteristics on liquidity risk in 14 commercial banks in Ethiopia over 6 years. The results showed that risk committee size, bank liquidity, capital adequacy ratio, loan concentration, income diversification, bank size, and loan growth were significant factors affecting liquidity risk, while board size, ownership type, risk committee meeting frequency and operational efficiency had no significant effect. The document recommends commercial banks improve loan portfolio diversification and rely more on non-traditional income to enhance effective risk management.
Market Theory, Capital Asset Pricing ModelKatie Gulley
Investment banks play an important role in capital markets by providing services to corporations and facilitating investment. They assist companies in raising capital through public offerings on stock exchanges or private placements. This process involves underwriting, wherein the investment bank takes on the risk of distributing securities if they cannot be sold. Investment banks also provide mergers and acquisitions advisory services to corporations. Their deep expertise in valuation and financing allows investment banks to effectively advise clients on major transactions.
An Evaluation of Camels Rating System as a Measure of Bank PerformanceAbu Hasan Al-Nahiyan
The principle objective of the study is to evaluate the performance of First Security Islami Bank (FSIBL) on the bases of CAMELS rating system. Specifically this study will look into:
a) To understand the literature of CAMELS rating system.
b) To know about First Security Islami Bank Ltd.
c) To evaluate CAMELS components on FSIBL.
d) To evaluate composite rating on FSIBL.
To suggest some policy measures for financial improvement of FSIBL.
Crimson Publishers-The Risk Level of Viet Nam Listed Medical and Human Resou...CrimsonPublishers-SBB
The Risk Level of Viet Nam Listed Medical and Human
Resource Company Groups After the Global Crisis
2009-2011 by Dinh Tran Ngoc Huy in Significances of Bioengineering & Biosciences
This document discusses the major components of stress testing processes required by regulators. It covers economic scenarios, cash flow models, new business plans, capital consumption models, income/expense models, and capital ratios. Accurately modeling cash flows is challenging, as separate risk functions make aggregation difficult. Regulators expect banks to use competing risk models to simultaneously consider multiple risk factors. Data and model limitations remain issues for banks to address.
International Journal of Business and Management Invention (IJBMI)inventionjournals
International Journal of Business and Management Invention (IJBMI) is an international journal intended for professionals and researchers in all fields of Business and Management. IJBMI publishes research articles and reviews within the whole field Business and Management, new teaching methods, assessment, validation and the impact of new technologies and it will continue to provide information on the latest trends and developments in this ever-expanding subject. The publications of papers are selected through double peer reviewed to ensure originality, relevance, and readability. The articles published in our journal can be accessed online.
Lesson 6 Discussion Forum Discussion assignments will beDioneWang844
Lesson 6 Discussion Forum :
Discussion assignments will be graded based upon the criteria and rubric specified in the Syllabus.
550 Words
For this Discussion Question, complete the following.
1. Review the two articles about bank failures and bank diversification that are found below this. Economic history assures us that the health of the banking industry is directly related to the health of the economy. Moreover, recessions, when combined with banking crisis, will result in longer and deeper recessions versus recessions that do occur with a healthy banking industry.
2. Locate two JOURNAL articles which discuss this topic further. You need to focus on the Abstract, Introduction, Results, and Conclusion. For our purposes, you are not expected to fully understand the Data and Methodology.
3. Summarize these journal articles. Please use your own words. No copy-and-paste. Cite your sources.
Please post (in APA format) your article citation.
Reply to Post 1: 160 words and Reference
Discussion on Bank’s failures and its diversification
Over the last two decades, business cycle volatility has decreased in the US. For example, some analysts claimed that companies handle inventory better today than ever, or that advances in financial systems have helped smooth industry volatility. Some emphasized stronger economic policy. Banking changes were also drastic in this same era, contributing to the restructuring and convergence of massive, global banking institutions in a better-organized structure. The article (Strahan, 2006) points out that some regulatory reform driven by individual countries rendered it possible for banks to preserve their resources and income by gradually diversifying from local downturns. Both low state volatility rates and a decline in partnerships between the local market and the central banking sector is a net influence on the diversification in banks. Considering the less fragile state economies following these intergovernmental financial reforms, there are some signs that financial convergence – while certainly not the only piece of the puzzle – has been less unpredictable.
Another article (Walter, 2005) argues that a long-standing reason for bank collapses during the crisis is a contagion, which contributes to systemic bank failures and the collapse of one bank initially. This indicates why several losses in the crisis period were unintentional, which ensured that the banks remained stable and endured without contagion-induced falls. The response to the contagion was the central government’s deposit policy, bringing an end to defaults. Nevertheless, since the sequence of errors began in the early 1920s, well before contagion was evident, the underlying trigger must be contagion.
Now it seems like the bank sector has undergone a shake-out that was worsened during the crisis by the deteriorating economic conditions. Although the reality that incidents occurred almost syno ...
A Comparative Analysis of Capital Structure between Banking and Non-Banking F...iosrjce
This document analyzes the capital structure and performance of banking and non-banking financial institutions in Bangladesh from 2009-2013. It uses annual reports from 10 commercial banks and 10 non-bank financial institutions to measure capital structure using debt to equity and debt to assets ratios, and performance using return on equity, return on assets, and earnings per share. Descriptive statistics and t-tests are used to compare differences between the banking and non-banking sectors. The results show no significant difference in earnings per share, but significant differences in debt to assets ratio, debt to equity ratio, return on assets, and return on equity between banks and non-banks.
A Comparison of Key Determinants on Profitability of India’s Largest Public a...Rajveer Rawlin
The banking sector in India has come under the scanner following some key changes in monetary policy. With
the Reserve bank of India (RBI) raising interest rates to support the falling Indian currency the Rupee, the cost of
funds of banks has increased significantly. This could manifest itself in rising non-performing assets (NPAs) and
declining profitability. The profitability of banks is impacted by both internal and external factors. This paper is
an attempt to compare the key drivers of profits at India’s largest public and private sector banks. Bank specific
metrics and risk factors were important drivers of profits at both banks. Productivity measures were key drivers
of profits at India’s largest public sector bank SBI but had no effect on profits at India’s largest private sector
bank, HDFC bank. Asset usage efficiency measures were key determinants of profitability at HDFC bank but not
at SBI. The single most important determinant of SBI proved to be business per employee, a productivity
measure while advances and bank size which are traditional bank metrics were key drivers of profits at HDFC
bank. Managers at both banks and their share holders thus can look at these drivers to develop a broad
understanding of profitability at the two banks.
Proposed topic of the res an emperical analysis on interest rate risk managem...tesfatsion tefera
Risk is defined as anything that can create hindrances in the way of achievement of certain objectives. It can be because of either internal factors or external factors, depending upon the type of risk that exists within a particular situation. Exposure to that risk can make a situation more critical. A better way to deal with such a situation; is to take certain proactive measures to identify any kind of risk that can result in undesirable outcomes. In simple terms, it can be said that managing a risk in advance is far better than waiting for its occurrence. Risk Management is a measure that is used for identifying, analyzing and then responding to a particular risk. It is a process that is continuous in nature and a helpful tool in decision making process. According to the Higher Education Funding Council for England (HEFCE), Risk Management is not just used for ensuring the reduction of the probability of bad happenings but it also covers the increase in likeliness of occurring good things. A model called “Prospect Theory” states that a person is more likely to take on the risk than to suffer a sure loss.
A STUDY ON THE FINANCIAL PERFORMANCE OF FOREIGN COMMERCIAL BANKS IN SRI LANKA...ectijjournal
Banks serve as backbone to the financial sector, which facilitate the proper utilization of financial
resources of a country. The banking sector is increasingly growing and it has witnessed a huge flow of
investment. The banking sector of developing countries is different from the developed countries in term of
performance. The banking sector, especially commercial banks of Sri Lanka plays a vital role in the Sri
Lankan economy. The focus of this study was to investigate the financial performance of foreign
commercial banks in Sri Lanka. Many studies are conducted in different countries to study the financial
performance of banking sector using the various statistical methods. In this study, the CAMEL rating
system is used to study the financial performance of foreign commercial banks in Sri Lanka. The study
selects three foreign banks for the analysis. Data was collected for the time period of 2008-2014.
According to the findings foreign sector banks are good in the performance of capital adequacy and
earnings while other variables show an average performance.
This document summarizes a study that analyzes the relative efficiency of Islamic banks worldwide from 1995-2001 using both parametric and nonparametric techniques. The results indicate that Islamic banks are on average less efficient than conventional banks, and that efficiency measures are correlated with accounting measures of performance like return on assets and return on equity. The paper aims to examine factors that influence cost efficiency and the long-term sustainability of Islamic banks. A brief literature review covers prior research on efficiency in conventional banks and the limited existing studies analyzing efficiency specifically in Islamic banks.
1. Electronic copy available at: http://ssrn.com/abstract=1666900Electronic copy available at: http://ssrn.com/abstract=1666900
1
A CAMELS ANALYSIS OF THE INDIAN BANKING INDUSTRY
MIHIR DASH1
ANNYESHA DAS
INTRODUCTION
The banking sector occupies a very important place in the country’s economy, acting
as an intermediary to all industries, ranging from agriculture, construction, textile,
manufacturing, and so on. The banking sector thus contributes directly to national
income and its overall growth. As the banking sector has a major impact on the
economy as a whole, evaluation, analysis, and monitoring of its performance is very
important.
Many methods are employed to analyse banking performance. One of the popular
methods is the CAMELS framework, developed in the early 1970’s by federal
regulators in the USA. The CAMELS rating system is based upon an evaluation of six
critical elements of a financial institution’s operations: Capital adequacy, Asset
quality, Management soundness, Earnings and profitability, Liquidity, and Sensitivity
to market risk. Under this bank is required to enhance capital adequacy, strengthen
asset quality, improve management, increase earnings, maintain liquidity, and reduce
sensitivity to various financial risks.
LITERATURE REVIEW
The analysis of banking performance has received a great deal of attention in the
banking literature. A popular framework used by regulators is the CAMELS
framework, which uses some financial ratios to help evaluate a bank’s performance
(Yue, 1992). Several studies involve the use of ratios for banks’ performance
appraisal, including Beaver (1966), Altman (1968), Maishanu (2004), and Mous
(2005).
Beaver (1966) initiated the use of financial ratios for predicting bankruptcy,
considering only one ratio at a time. Altman (1968) went further, using a multiple
discriminant analysis (MDA) for the same purpose, combining several financial ratios
in a single prediction model called the Altman’s z-score model. However, Altman’s
model ignored the industry-specificity of “healthy” indications by the financial ratios.
Maishanu (2004) studied financial health of banks, and suggested eight financial
ratios to diagnose the financial state of a bank.
Mous (2005) studied bankruptcy prediction models of banks using financial ratios of
profitability, liquidity, leverage, turnover and total assets in decision tree models and
multiple discriminant models, and found that the decision tree approach performed
better.
The CAMEL framework was originally intended to determine when to schedule on-
site examination of a bank (Thomson, 1991; Whalen and Thomson, 1988). The five
CAMEL factors, viz. Capital adequacy, Asset quality, Management soundness,
Earnings and profitability, and Liquidity, indicate the increased likelihood of bank
1
The first author is a senior faculty at Alliance Business School, No. 2 & 3, 2nd
Cross, 36th
Main, BTM Layout, I Stage,
Bangalore-560068, and can be contacted by phone on +91-9945182465, or by email at mihirda@rediffmail.com. The other
author is a research scholar at the same institution.
2. Electronic copy available at: http://ssrn.com/abstract=1666900Electronic copy available at: http://ssrn.com/abstract=1666900
2
failure when any of these five factors prove inadequate. The choice of the five
CAMEL factors is based on the idea that each represents a major element in a bank’s
financial statements. Several studies provide explanations for choice of CAMEL
measures: Lane et al. (1986), Looney et al. (1989), Elliott et al (1991), Eccher et al.
(1996), and Thomson (1991). For example, Waldron et al (2006) suggested that one
of these threats represented in CAMEL exists in the loss of assets (A); similarly,
short-term liquid assets (L) aid in covering loan payment defaults and offset the threat
of losses or large withdrawals that might occur. The CAMELS framework extends the
CAMEL framework, considering six major aspects of banking: Capital adequacy,
Asset quality, Management soundness, Earnings and profitability, Liquidity, and
Sensitivity to market risk.
The usage of the CAMEL(S) framework in banking studies in emerging economies is
limited. Wirnkar and Tanko (2008) studied banking performance of major Nigerian
banks using the CAMEL framework. Very recently, Sangmi and Nazir (2010) have
studied banking performance of two Indian banks using the CAMEL framework.
Also, Agarwal and Sinha (2010) have studied the performance of microfinance
institutions in India using the CAMEL framework.
The present study analyses and compares the performance of public and
private/foreign banks in India using the CAMELS framework.
DATA AND METHODOLOGY
The analysis was performed for a sample of fifty-eight banks operating in India, of
which twenty-nine were public sector banks, and twenty-nine were private
sector/foreign banks. The study covered the financial years 2003-04, 2004-05, 2005-
06, 2006-07, and 2007-08 (i.e. prior to the global financial crisis). The data for the
study consisted of financial variables and financial ratios based on the CAMELS
framework, obtained from the Capitaline database. The variables used in the analysis
were: Tier-I Capital, Tier-II Capital, and Capital Adequacy Ratio (for Capital
Adequacy); Gross Non-performing Assets, Net Non-performing Assets, and Net Non-
performing Assets to Total Advances Ratio (for Asset Quality); Total Investments to
Total Assets Ratio, Total Advances to Total Deposits Ratio, Sales per Employee, and
Profit After Tax per Employee (for Management Soundness); Return on Net Worth,
Operating Profit to Average Working Fund Ratio, Profit After Tax to Total Assets
Ratio (for Earnings and profitability); Government Securities to Total Investments
Ratio and Government Securities to Total Assets Ratio (for Liquidity); and Beta (for
Sensitivity to Market Risk).
In order to calculate the CAMELS ratings for the banks, the ratios corresponding to
each CAMELS factor were considered: viz. Capital Adequacy Ratio, Net Non-
performing Assets to Total Advances Ratio, Total Investments to Total Assets Ratio,
Total Advances to Total Deposits Ratio, Sales per Employee, Profit After Tax per
Employee, Return on Net Worth, Operating Profit to Average Working Fund Ratio,
Government Securities to Total Investments Ratio, and Beta (two ratios, viz. Profit
After Tax to Total Assets Ratio and Government Securities to Total Investments Ratio
were removed). The variables were normalized using the formula: , where u
represents the upper bound, and l the lower bound; the ratings were assigned as
follows: 1 = 0.0 - 0.2, 2 = 0.2 - 0.4, 3 = 0.4 - 0.6, 4 = 0.6 - 0.8, and 5 = 0.8 - 1.0
(except for non-performing assets and beta, for which the ratings were reversed). The
CAMELS rating was obtained as the total of the individual variable ratings.
3. 3
ANALYSIS AND INTERPRETATION
CAPITAL ADEQUACY: Table 1 shows the Tier-I Capital, Tier-II Capital, and
Capital Adequacy Ratio of public and private/foreign banks. It was found that
private/foreign banks had higher Tier-I Capital than public sector banks, while public
sector banks had higher Tier-II Capital than private/foreign banks. It was also found
that private/foreign banks had higher Capital Adequacy Ratio than public sector
banks. In particular, these differences were statistically significant in 2008.
ASSET QUALITY: Table 2 shows the Gross Non-performing Assets, Net Non-
performing Assets, and Net Non-performing Assets to Total Advances Ratio of public
and private/foreign banks. It was found that public sector banks had higher Gross
Non-performing Assets and Net Non-performing Assets than private/foreign banks,
and that these differences were statistically significant. On the other hand, there was
no significant difference in the Net Non-performing Assets to Total Advances Ratio
of public and private/foreign banks.
MANAGEMENT SOUNDNESS: Table 3 shows the Total Investments to Total
Assets Ratio, Total Advances to Total Deposits Ratio, Sales per Employee, and Profit
After Tax per Employee of public and private/foreign banks. It was found that
private/foreign banks had higher Total Investments to Total Assets Ratio than public
sector banks, while public sector banks had higher Total Advances to Total Deposits
Ratio than private/foreign banks; however, these differences were not statistically
significant. It was found that private/foreign banks had higher Sales per Employee
than public sector banks, and that these differences were statistically significant. It
was also found that private/foreign banks had higher Profit After Tax per Employee
than public sector banks, but that these differences were not statistically significant.
EARNINGS AND PROFITABILITY: Table 4 shows the Return on Net Worth,
Operating Profit to Average Working Fund Ratio, Profit After Tax to Total Assets
Ratio of public and private/foreign banks. It was found that public sector banks had
higher Return on Net Worth than private/foreign banks, and that these differences
were statistically significant. On the other hand, it was found that private/foreign
banks had higher Operating Profit to Average Working Fund Ratio and Profit After
Tax to Total Assets Ratio than public sector banks, though the differences were not
statistically significant.
LIQUIDITY: Table 5 shows the Government Securities to Total Investments Ratio
and Government Securities to Total Assets Ratio of public and private/foreign banks.
It was found that public sector banks had higher Government Securities to Total
Investments Ratio and Government Securities to Total Assets Ratio than
private/foreign banks (except in 2008), but the differences were not statistically
significant.
SENSITIVITY TO MARKET RISK: Table 6 shows the Beta of public and
private/foreign banks. It was found that public sector banks had higher Beta than
private/foreign banks, and the difference was statistically significant.
OVERALL CAMELS RATINGS: Table 7 shows the overall CAMELS ratings for all
the sample banks in the study period. It was found that Barclays Bank was the best
performing bank in the years 2003-04, 2004-05, and 2005-06, while Bank of America
was the best performing bank in the years 2006-07 and 2007-08.
Table 8 shows the overall CAMELS ratings of public and private/foreign banks.
There was found to be no significant difference in the overall CAMELS ratings of
4. 4
public and private/foreign banks. Moreover, there was a trend improvement in the
overall CAMELS ratings of private/foreign banks over that of public sector banks.
DISCUSSION
The results of the study show that private/foreign banks fared better than public sector
banks on most of the CAMELS factors in the study period. The two contributing
factors for the better performance of private/foreign banks were Management
Soundness and Earnings and Profitability.
The results of the study suggest that public sector banks have to adapt quickly to
changing market conditions, in order to compete with private/foreign banks. This is
particularly due to the wide difference in their credit policy, customer service, ease of
access and adoption of IT services in their banking system. Public sector banks must
improve their credit lending policies so as to improve asset quality and profitability.
They need to continuously monitor the health and profitability of bank borrowers, so
that the risk of non-performing assets decreases. They also must improve their
marketing and distribution strategies in order to attract customers and provide better
customer service. They also must take steps to improve employee motivation and
productivity.
There are some limitations inherent in the present study. The sample size used for the
study is limited. Further, the study period was limited due to the limited availability of
data. Another limitation was in the nature of the overall CAMELS rating used: the
rating gives undue importance to the factors of management soundness and earnings.
Further, the CAMELS framework is not a comprehensive framework; for example, it
does not take into consideration other forms of risk (such as credit risk). Further
studies can incorporate other risk factors into the framework to provide a more
comprehensive measure of banking performance.
BIBLIOGRAPHY
Agarwal, P.K. and Sinha, S.K. (2010), “Financial Performance of Microfinance
Institutions of India,” Delhi Business Review, 11(2).
Altman, I.E. (1968), “Financial Ratios, Discriminant Analysis and Prediction of
Corporate Bankruptcy,” Journal of Finance, September 1968, New York
University.
Eccher, E. A., Ramesh K., and Thiagarajan S. R. (1996), “Fair value disclosures
by bank holding companies,” Journal of Accounting and Economics, 22(1).
Elliott, J. A., Douglas, H. L. J., and Shaw, W. H. (1991), “The Evaluation by the
Financial Markets of Changes in Bank Loan Loss Reserve Levels,” The
Accounting Review, 66(4).
Lane, W. R., Looney, S. W., and Wansley J. W. (1986), “An Application of the
Cox Proportional Hazards Model to Bank Failure,” Journal of Banking and
Finance, 10(4).
Looney, S. W., Wansley, J. W., and Lane, W. R. (1989), “An Examination of
Misclassifications with Bank Failure Prediction Models,” Journal of Economics
and Business, 41(4).
Maishanu, M.M. (2004), “A Univariate Approach to Predicting failure in the
Commercial Banking Sub-Sector,” Nigerian Journal of Accounting Research,
Vol. 1, No. 1.
5. 5
Mous, L. (2005), “Predicting bankruptcy with discriminant analysis and decision
tree using financial ratios,” Working Paper Series, University of Rotterdam.
Sangmi, M. and Nazir, T. (2010), “Analyzing Financial Performance of
Commercial Banks in India: Application of CAMEL Model,” Pak. J. Commer.
Soc. Sci., 4(1)
Thomson, J. B. (1991), “Predicting Bank Failures in the 1980s,” Federal Reserve
Bank of Cleveland Economic Review, 27.
Waldron, M., Jordan, C., and MacGregor, A. (2006), “the Information Content of
Loan Default Disclosure in the Prediction of Bank Failure,” Journal of Business &
Economic Research, 4(9).
Whalen, G. and Thomson, J. B. (1988), “Using Financial Data to Identify Changes
in Bank Conditioning. Federal Reserve Bank of Cleveland,” Economic Review,
24(1), 17-26.
Wirnkar, A.D. and Tanko, M. (2008), “CAMELS and Banks Performance
Evaluation: The Way Forward,” Working Paper Series, SSRN:
http://ssrn.com/abstract=1150968
Yue, P. (1992), “Data Envelopment Analysis and Commercial Bank Performance:
A Primer with Applications to Missouri Banks,” Working Papers, IC2
Institute,
University of Texas at Austin.
7. 7
Table 3: Management Soundness
2004 2005 2006 2007 2008
private/foreign public private/foreign public private/foreign public private/foreign public private/foreign public
Total
Investments:
Total Assets
mean 33.9520 39.9900 34.0070 36.0970 30.0930 29.8450 29.7030 26.3860 28.4069 24.0517
std. dev. 13.8621 10.3075 8.9716 9.4176 8.0381 8.1042 7.7604 6.9939 13.3129 7.8020
F-statistic 3.5430 0.7490 0.0140 2.9240 2.3100
p-value 0.0650 0.3910 0.9070 0.0930 0.1340
Total
Advances:
Total
Deposits
mean 63.2424 105.0652 73.2493 117.5234 77.0934 2040.2352 84.7807 1285.3172 77.8710 580.3107
std. dev. 42.5020 185.0132 49.6188 217.6143 43.2790 10549.0729 63.4981 6484.2471 46.3586 2694.3073
F-statistic 1.4080 1.1410 1.0040 0.9940 1.0080
p-value 0.2400 0.2900 0.3210 0.3230 0.3200
Sales per
Employee
mean 5.7541 2.2328 6.2979 3.1010 6.8490 3.8903 7.3938 4.6790 8.9931 5.9145
std. dev. 4.0709 0.9473 4.1143 2.3069 4.3031 2.8337 4.4179 2.3429 5.9585 3.0223
F-statistic 20.5840 13.3210 9.5630 8.5470 6.1570
p-value 0.0000 0.0010 0.0030 0.0050 0.0160
Profit After
Tax per
Employee
mean 0.1752 0.0800 0.1466 0.0755 0.1862 0.0762 0.1286 0.0845 0.1548 0.0897
std. dev. 0.3995 0.2241 0.3342 0.2459 0.5104 0.2474 0.1929 0.2566 0.2529 0.2718
F-statistic 1.2520 0.8500 1.0910 0.5480 0.8940
p-value 0.2680 0.3600 0.3010 0.4620 0.3490
Table 4: Earnings and Profitability
2004 2005 2006 2007 2008
private/foreign public private/foreign public private/foreign public private/foreign public private/foreign public
Return on Net
Worth
mean 15.8445 25.3186 9.6024 18.2507 11.0345 15.2852 12.7783 17.6931 12.8828 19.2259
std. dev. 11.1593 10.4188 7.8660 9.2394 6.4684 7.2117 7.3289 5.7299 6.9565 5.9922
F-statistic 11.1680 14.7310 5.5830 8.0940 13.8410
p-value 0.0010 0.0000 0.0220 0.0060 0.0000
Operating
Profit: Average
Working Fund
mean 3.2338 3.0772 2.0593 2.3969 2.8607 2.0186 2.9145 1.9734 3.0662 1.7824
std. dev. 2.9614 0.7279 1.4878 0.7739 3.0354 0.3934 1.7458 0.3383 1.8654 0.5503
F-statistic 0.0760 1.1750 2.1950 8.1210 12.6360
p-value 0.7830 0.2830 0.1440 0.0060 0.0010
Profit After
Tax: Total
Assets
mean 1.3676 1.3348 0.6969 0.9907 1.3597 0.9110 1.4172 0.9879 1.4214 0.9731
std. dev. 1.1553 0.4765 1.2869 0.4988 1.9140 0.4114 1.0914 0.2657 0.9207 0.3269
F-statistic 0.0200 1.3140 1.5230 4.2360 6.1050
p-value 0.8880 0.2570 0.2220 0.0440 0.0170
8. 8
Table 5: Liquidity
2004 2005 2006 2007 2008
private/foreign public private/foreign public private/foreign public private/foreign public private/foreign public
Government
Securities:
Total
Investments
mean 72.2450 78.7110 74.4170 79.3930 75.8070 81.6790 71.9720 81.2340 72.4690 78.7034
std. dev. 23.0563 15.4482 13.4782 20.0318 10.3587 11.0560 17.9599 10.5502 22.8196 18.6039
F-statistic 1.5740 11.6720 4.3570 5.7340 1.3000
p-value 0.2150 0.0010 0.0410 0.0200 0.2590
Government
Securities:
Total Assets
mean 26.0970 32.0450 25.4720 28.8790 22.4520 24.8280 21.0030 21.8340 22.0862 20.2034
std. dev. 11.6054 10.1892 9.2848 10.5742 4.1967 7.3647 3.3962 6.2052 9.2968 6.8011
F-statistic 4.3020 1.7000 2.2780 0.4000 0.7750
p-value 0.0430 0.1980 0.1370 0.5300 0.3830
Table 6: Sensitivity to Market Risk
2004 2005 2006 2007 2008
private/foreign public private/foreign public private/foreign public private/foreign public private/foreign public
Beta mean 0.4148 0.8921 0.4207 0.8645 0.4490 0.6862 0.4331 0.7224 0.4897 0.6397
std. dev. 0.5262 0.7518 0.5107 0.7322 0.5807 0.5056 0.4751 0.5360 0.5338 0.4428
F-statistic 7.8430 7.1660 2.7530 4.7310 1.357
p-value 0.0070 0.0100 0.1030 0.0340 0.249
9. 9
Table7: Overall CAMELS Ratings
Bank
CAMELS
2008
CAMELS
2007
CAMELS
2006
CAMELS
2005
CAMELS
2004
Allahabad Bank 29 30 32 36 34
Andhra Bank 32 31 29 34 34
Bank of Baroda 29 27 25 32 31
Bank of India 33 27 25 26 29
Bank of Maharastra 29 27 27 32 33
Canara Bank 30 29 29 33 31
Central Bank 25 26 26 32 30
Corporation Bank 32 29 29 33 33
Dena Bank 30 25 26 30 29
EXIM Bank 34 31 27 34 26
IDBI Bank 27 26 27 31 31
Indian Bank 34 34 31 33 31
Indian Overseas Bank 32 34 33 35 32
NABARD 21 23 22 31 32
Oriental Bank 28 29 29 36 34
Punjab National Bank 31 27 27 30 32
Punjad Sind Bank 33 31 27 26 25
State Bank of Indore 29 28 27 33 36
State Bank of Mysore 33 31 32 38 34
State Bank of Patiala 30 29 30 34 36
State Bank of Bikaner and Jaipur 30 30 28 36 34
State Bank of Hyderabad 31 32 33 34 35
State Bank of Travancore 23 32 29 36 35
State Bank of India 25 26 29 35 32
Syndicate Bank 30 31 32 35 33
United Bank of India 26 29 29 36 33
UCO Bank 24 25 26 32 32
Union Bank 34 29 25 33 31
Vijaya Bank 27 30 28 36 36
ABN Amro Bank 34 36 31 35 32
American Express Bank 20 30 30 32 25
AXIS Bank 31 30 29 32 32
Bank of America 46 39 31 35 33
Bank of Rajasthan 29 29 22 29 32
Barclays Bank 32 36 40 42 45
BNP Paribas 39 35 28 30 30
Celyon Bank 44 38 35 33 31
Development Credit Bank 28 27 22 25 28
Deutshe Bank 39 31 27 32 39
Dhanalakshmi Bank 28 25 24 27 29
HDFC Bank 34 32 30 33 31
10. 10
HSBC Bank 32 33 29 33 34
ICICI Bank 29 28 29 32 32
IndusInd Bank 23 26 27 35 34
ING Vysya Bank 27 27 24 27 28
Jammu & Kashmir Bank 28 26 26 28 31
Karnataka Bank 30 25 28 33 30
Karur Vysya Bank 33 33 28 31 33
Kotak Mahindra Bank 30 28 29 30 33
Lakshmi Vilas Bank 25 25 26 29 28
Mizuho Corporate Bank 35 31 25 38 31
Nainital Bank 20 27 27 30 18
Ratanakar Bank 31 25 22 23 28
Standard Chartered Bank 36 36 31 34 34
Societe Generale Bank 38 33 34 41 35
South Indian Bank 28 29 26 30 33
TamilNad Merchantile Bank 32 32 27 33 30
Yes Bank 34 29 27 26 17
Table 8: Overall CAMELS ratings
2004 2005 2006 2007 2008
private/foreign public private/foreign public private/foreign public private/foreign public private/foreign public
CAMELS mean 30.8966 32.2069 31.6552 33.17241 28.0690 28.2414 30.3793 28.8966 31.5517 29.3448
std. dev. 5.2328 2.6777 4.2951 2.8166 3.9364 2.6546 4.1440 2.6905 6.0979 3.4566
F-statistic 1.4411 2.5305 0.0382 2.6118 2.8747
p-value 0.2350 0.1173 0.8457 0.1117 0.0955