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

1
Tesfaye Boru Lelissa
Tesfaye Boru Lelissa
2
Abdurezak Mohammed Kuhil
Abdurezak Mohammed Kuhil
1 Addis Ababa University
2 Addis Abeba University

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Empirical Evidence on the Impact of Bank-Specific Factors on the Commercial Banks Performance: the CAMEL Model and Case of Ethiopian Banks Banner
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The study has investigated one of the key research questions: how do 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 from Capital Adequacy, Asset Quality, Management, Earning and Liquidity. It has used six variables representing each of the components and run 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 bank’s capital holding, asset quality and business diversification, cost control and liquidity positions are important part of the management decisions to have a significant influence on performances.

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No external funding was declared for this work.

Conflict of Interest

The authors declare no conflict of interest.

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No ethics committee approval was required for this article type.

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Not applicable for this article.

Tesfaye Boru Lelissa. 2018. \u201cEmpirical Evidence on the Impact of Bank-Specific Factors on the Commercial Banks Performance: the CAMEL Model and Case of Ethiopian Banks\u201d. Global Journal of Management and Business Research - C: Finance GJMBR-C Volume 18 (GJMBR Volume 18 Issue C5): .

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GJMBR Volume 18 Issue C5
Pg. 19- 30
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Crossref Journal DOI 10.17406/GJMBR

Print ISSN 0975-5853

e-ISSN 2249-4588

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GJMBR-C Classification: JEL Code: G21
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August 6, 2018

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English

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The study has investigated one of the key research questions: how do 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 from Capital Adequacy, Asset Quality, Management, Earning and Liquidity. It has used six variables representing each of the components and run 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 bank’s capital holding, asset quality and business diversification, cost control and liquidity positions are important part of the management decisions to have a significant influence on performances.

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

Tesfaye Boru Lelissa
Tesfaye Boru Lelissa Addis Ababa University
Abdurezak Mohammed Kuhil
Abdurezak Mohammed Kuhil Addis Abeba University

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