International Journal of Financial Management

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Empirical Evidence of the Impact of Bank-Specific Factors on the Commercial Banks’ Performance:The CAMEL Model and the Case of Ethiopian Banks


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1 School of Commerce, College of Business and Economics, Addis Ababa University, Ethiopia
     

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The study has investigated one of the key research questions: how bank-specific factors are related to bank performance? The model constructed is framed based on the commonly used supervisory tool to monitor bank performance: CAMEL. This consists of elements such as Capital Adequacy, Asset Quality, Management, Earning and Liquidity. It has used six variables representing each of the components and runs a regression model based on fixed and random models. The outcome shows that many of the bank-specific factors have a significant statistical relationship with performance measures. Despite the mixed result in the various models, the study explored that a bank’s capital holding, asset quality and business diversification, cost control and liquidity positions are important parts of the management decisions that have a significant influence on its performance.

Keywords

Performance, Commercial Banks, Ethiopia, CAMEL Model.
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  • Empirical Evidence of the Impact of Bank-Specific Factors on the Commercial Banks’ Performance:The CAMEL Model and the Case of Ethiopian Banks

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Authors

Abdurezak Mohammed Kuhil
School of Commerce, College of Business and Economics, Addis Ababa University, Ethiopia

Abstract


The study has investigated one of the key research questions: how bank-specific factors are related to bank performance? The model constructed is framed based on the commonly used supervisory tool to monitor bank performance: CAMEL. This consists of elements such as Capital Adequacy, Asset Quality, Management, Earning and Liquidity. It has used six variables representing each of the components and runs a regression model based on fixed and random models. The outcome shows that many of the bank-specific factors have a significant statistical relationship with performance measures. Despite the mixed result in the various models, the study explored that a bank’s capital holding, asset quality and business diversification, cost control and liquidity positions are important parts of the management decisions that have a significant influence on its performance.

Keywords


Performance, Commercial Banks, Ethiopia, CAMEL Model.

References