An examination of state-owned and privately-owned commercial banks by CAMELS Performance Rating System

An examination of state-owned and privately-owned commercial banks by CAMELS Performance Rating System It is very important for the banks; which constitute the backbone of national economies. especially the financial systems, to be healthy from a macro point of view and efficient from a micro point of view In this study CAMELS performance rating system, best known system in the onsite auditing and distance supervision, is used. This system is utilized for the evaluation of financial situations of three state-owned commercial banks and five privately-owned commercial banks in Turkey These banks are evaluated with CAMELS rating system for the years between 2003 and 2007. For the six components of CAMELS system, 17 financial ratios were chosen and with these ratios; reference values, index values and CAMELS scores are obtained. No e of the banks could obtain an improvement in all of the six CAMELS components for the five years period. It has been observed that each of the banks achieved improvements for different CAMELS components. As a result of the analysis, an improvement in the CAMELS ratings is observed for the 88% of the banks analyzed. It is determined that the improvement obtained is mainly from the component of Liquidity. Nonetheless, the banks which had descending CAMELS ratings are because of the components as Asset Quality, Management Quality and predominant Sensitivity to Market Risk. None of the banks showed an integrated improvement for each of the component for five years. The banks that analyzed showed improvement for different components, nonetheless bank strategies have fragility and effects of crisis.