Abstract
This study has been initiated to achieve the objective that is; “to
evaluate the impact of CAMELS Ratio on performance of banking
sector in terms of Efficiency by using regression model”.
CAMELS ratio has been used because it is internationally
accepted bank performance measuring tool that evaluates the
overall financial health of banks by identifying financial,
managerial and operational strength and weaknesses of the bank.
‘CAMELS’ is an abbreviation of; Capital, Assets, Management,
Earning, Liquidity and Sensitivity to market risk. We have
evaluated the performance of the 15 banks which are listed at
Karachi Stock Exchange for data between 200-2012. Both Fixed and
random effects models were estimated. Empirical results of study
CAMELS evaluation and analyses results for the Pakistani sample
banks revealed that almost all large banks are placed at the top
that shows better performance and efficiency in the banking
industry as compared to the small banks that were lagging
behind. The results of the Generalized Least Square (GLS)
method based on CAMELS ratios has shown that asset quality,
Earning and liquidity have significant predictability.
Sheeba Zafar, Sajjad Ahmad Afridi, Saima Urooge. (2017) An Empirical Investigation of Banking Sector Performance of Pakistan by Using CAMELS Ratio of Framework, Journal of Managerial Sciences, Volume 11, Issue 3.
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