USING THE CAMEL FRAMEWORK IN ASSESSING BANK PERFORMANCE IN MALAYSIA

  • Siti Nurain Muhmad School of Maritime Business and Management, Universiti Malaysia Terengganu, 21030 Kuala Terengganu, Terengganu, Malaysia.
  • Hafiza Aishah Hashim School of Maritime Business and Management, Universiti Malaysia Terengganu, 21030 Kuala Terengganu, Terengganu, Malaysia.

Abstract

The banking sector in Malaysia suffered a bitter experience during the Asian financial crisis. Because of the crisis, many researchers across the globe attempted to better measure bank performance. This study highlights the evaluation of bank performance, including both domestic and foreign banks in Malaysia, using the Capital adequacy, Asset quality, Management competency, Earning quality, and Liquidity (CAMEL) framework for the period 2008 to 2012. Using regression analysis, the results of the study showed that capital adequacy, asset quality, earning quality and liquidity have a significant impact on performance of Malaysian banks. The outcome of this study is important to policymakers in assessing bank performance that could determine the direction of the future banking system in Malaysia.

References

Akhter, W. “Efficiency and Performance of Islamic Banking: The Case of Pakistan.” Far East Journal of Psychology and Business 2, no. 2 (2011): 54-70.

Beck, N., and J.N. Katz. “What to Do (and Not to Do) with Time Series Cross-Section Data.” American Political Science Review 89, no. 3 (1995): 634-647.

Botosan, C.A. “Disclosure Level and the Cost of Equity Capital.” Accounting review 72, no. 3 (1997): 323-49.

Buyuksalvarcl, A., and H. Abdioglu. “Determinants of Capital Adequacy Ratio in Turkish Banks: A Panel Data Analysis “. African Journal of Business Management 5, no. 27 (2011): 11199-209.

Chantapong, S. “Comparative Study of Domestic and Foreign Bank Performance in Thailand: The Regression Analysis.”Economic Change and Restructuring 38, no. 1 (2003): 63-83.

Dang, U. “The Camel Rating System in Banking Supervision a Case Study.” Arcada University of Applied Sciences, 2011.

Daud, N.A. “Prestasi Perbankan Di Malaysia: Analisis Camel.”Prosiding Perkem VIII 1 (2013): 1331-39.

Dincer, H., G. Gencer, N. Orhan, and K. Sahinbas. “A Performance Evaluation of the Turkish Banking Sector after the Global Crisis Via Camels Ratios.” Procedia Social and Behavioral Sciences 24 (2011): 1530-45.

Douglas, E., D. Lont, and T. Scott. “Finance Company Failure in New Zealand During 2006–2009: Predictable Failures?” Journal of Contemporary Accounting and Economics 10 (2014): 277-95.

Dzeawuni, W.A., and M. Tanko. “Camels and Banks Performance Evaluation: The Way Forward.” Working Paper, SSRN (2008). http://ssrn.com/abstract=1150968

Freahat, K.I.A.A. “Evaluating Performance of Commercial Banks: An Empirical Study in Jordan (2004-2008).” PhD diss, Universiti Utara Malaysia, 2009.

Haron, S. “Determinants of Islamic Bank Profitability.” The Global Journal of Finance and Economics 1, no. 1 (2004): 11-33.

Idris, F. “Predicting Bank Financial Conditions Using a Logit Regression Approach: Empirical Evidence from Malaysia.” Interdisciplinary Journal of Contemporary Research in Business 1, no. 12 (2010): 179-97.

Ilhomovich, S.E. “Factors Affecting the Performance of Foreign Banks in Malaysia.” MSc thesis, Universiti Utara Malaysia, 2009.

Jaffar, M., and I. Manarvi. “Performance Comparison of Islamic and Conventional Banks in Pakistan.” Global Journal of Management and Business Research 11, no. 1 (2011): 60-66.

Keovongvichith, P. “An Analysis of the Recent Financial Performance of the Laotian Banking Sector During 2005-2010.” International Journal of Economics and Finance 4, no. 4 (2012): 148-62.

Khrawish, H.A. “Determinants of Commercial Banks Performance: Evidence from Jordan.” International Research Journal of Finance and Economics, no. 81 (2011): 148-59.

Kuppusamy, M. “Measurement of Islamic Banks Performance Using a Shariah Conformity and Profitability Model.” Review of Islamic Economics 12, no. 1 (2010): 35-48.

Moin, M.S. “Performance of Islamic Banking and Conventional Banking: A Comparative Study”. MA thesis, University of Skövde, 2008.

Nimalathasan, B. “A Comparative Study of Financial Performance of Banking Sector in Bangladesh – an Application of Camels Rating System.” Economic and Administrative Series 2 (2008): 141-52.

Pevalin, D., and K. Robson. The Stata Survival Manual. Edited by Open University Press Glasgow: McGraw-Hill International, 2009.

Prasad, K.V.N., and G. Ravinder. “A Camel Model Analysis of Nationalized Banks in India.” International Journal of Trade and Commerce 1, no. 1 (2012): 23-33.

Rezaei, F., B. Ghorbani, and A. Yaghoubi. “The Effect of Corporate Governance on Enterprises' Finance Structure.” Interdisciplinary Journal of Contemporary Research in Business 3, no. 11 (2012): 187-202.

Said, R.M., F.M. Nor, S.-W. Low, and A.A. Rahman. “The Efficiency Effects of Mergers and Acquisitions in Malaysian Banking Institutions.” Asian Journal of Business and Accounting 1, no. 1 (2008): 47-66.

Samad, A. “Performance of Interest-Free Islamic Banks Vis-À-Vis Interest-Based Conventional Banks of Bahrain.” IIUM Journal of Economics and Management 12, no. 2 (2004): 1-15.

Sangmi, M.-u.-D., and T. Nazir. “Analyzing Financial Performance of Commercial Banks in India: Application of Camel Model.” Pakistan Journal of Commerce and Social Science 4, no. 1 (2010): 40-55.

Sekaran, U. Business Research Methods for Managers: A SkillBuilding.
Approach, 4th Edition. New York: John Wiley and Sons Incorporations, 2003.

Selvavinayagam, K. “Financial Analysis of Banking Institutions.”FAO Investment Centre Occasional Paper Series 1 (1995): 1-34.

Shar, A.H., M.a. Shah, and H. Jamali. “Performance Evaluation of Banking Sector in Pakistan: An Application of Bankometer.” International Journal of Business and Management 5, no. 9 (2010): 81-86.

Tarawneh, M. “A Comparison of Financial Performance in the Banking Sector: Some Evidence from Omani Commercial Banks.” International Research Journal of Finance and Economics, no. 3 (2006): 101-12.

Tas, N., A. Hepsen, and E. Onder. “Analyzing Macroeconomic Indicators of Economic Growth Using Panel Data “. Journal of Finance and Investment Analysis Vol 2, no. 3 (2013): 41-53.

Teck, Y.K. “A Comparative Study of the Performance of Commercial Banks, Finance Companies and Merchant Banks in Malaysia, 1990- 1998.” Iowa State University 2000.

Wu, Y., C. Gaunt, and S. Gray. “A Comparison of Alternative Bankruptcy Prediction Models.” Journal of Contemporary Accounting & Economics 6, no. 1 (2010): 34-45.
Published
2015-06-01
How to Cite
Muhmad, S. N., & Hashim, H. A. (2015). USING THE CAMEL FRAMEWORK IN ASSESSING BANK PERFORMANCE IN MALAYSIA. International Journal of Economics, Management and Accounting, 23(1). Retrieved from https://journals.iium.edu.my/enmjournal/index.php/enmj/article/view/292
Section
Articles