Strategic Insights into Bank Performance: CAMELS Analysis of Indian Banks

Vidya Sagar; Pavan Kumar

doi:10.36948/ijfmr.2024.v06i06.32284

Strategic Insights into Bank Performance: CAMELS Analysis of Indian Banks

Author(s)	Vidya Sagar, Pavan Kumar
Country	India
Abstract	The banking sector is a cornerstone of the global economy, driving economic growth, financial sta-bility, and efficient resource allocation. Assessing the financial health and operational effectiveness of banks is crucial for maintaining the stability of the broader financial system. The CAMEL model, a well-established analytical framework, provides a comprehensive approach to evaluating key aspects of bank-ing performance, including Capital Adequacy, Asset Quality, Management Efficiency, Earnings Quality, and Liquidity. This model highlights areas for improvement and ensures a thorough assessment of a bank’s financial soundness. Extensive research has confirmed the model's applicability across various global contexts, including India, Nepal, Pakistan, Saudi Arabia, and Sri Lanka, consistently identifying asset quality, capital adequacy, and earnings as essential drivers of profitability. The model also reveals that private banks generally outperform public banks in most parameters. Moreover, the CAMEL model has proven to be a valuable tool in promoting financial inclusion, particularly through the analysis of Small Finance Banks, and its adaptability to emerging markets further underscores its relevance. Despite its broad applicability, gaps exist in the literature, particularly regarding the model’s adaptation to diverse regulatory environments and market dynamics. Addressing these gaps will enable more customized strategies for financial analysis and risk management, enhancing the resilience of the global banking system. This study aims to contribute to this discourse by exploring the nuanced use of the CAMEL model in assessing the financial performance of banks in varied contexts. The findings aim to offer ac-tionable insights for improving financial performance, managing risks, and fostering sustainable growth in the banking industry.
Keywords	CAMEL model, financial health, capital adequacy, asset quality, profitability, financial performance.
Field	Sociology > Banking / Finance
Published In	Volume 6, Issue 6, November-December 2024
Published On	2024-12-02
Cite This	Strategic Insights into Bank Performance: CAMELS Analysis of Indian Banks - Vidya Sagar, Pavan Kumar - IJFMR Volume 6, Issue 6, November-December 2024. DOI 10.36948/ijfmr.2024.v06i06.32284
DOI	https://doi.org/10.36948/ijfmr.2024.v06i06.32284
Short DOI	https://doi.org/g8tgpp

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Strategic Insights into Bank Performance: CAMELS Analysis of Indian Banks

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