CAMELS parameters
| Parameter | Definition |
|---|---|
| Capital adequacy (C) | Capital Adequacy is a calculation of the capital required to control the risk based on the bank asset value |
| Asset quality (A) | Asset quality is the instability of soundness banking induced by unsettled bank assets affected by high nonperforming loans |
| Management efficiency (M) | Management measures the efficiency of the company to minimize and reduce costs and increase profits to prevent the possibility of bank failures |
| Earnings (E) | Earning is a measure of profitability and there is an assessment of earnings and their level of relationship with peers in which the objective is to evaluate the effect of internally produced funds on the capital of the bank |
| Liquidity (L) | Liquidity is the capacity and ability of banks to repay and reimburse short-term obligations |
| Sensitivity to market risk (S) | Sensitivity to market risk is the measure of how resilient the assets, liabilities and net worth values of the bank are to changes in market conditions such as rate of interest, foreign exchange and inflation risk |
| Parameter | Definition |
|---|---|
| Capital adequacy (C) | Capital Adequacy is a calculation of the capital required to control the risk based on the bank asset value |
| Asset quality (A) | Asset quality is the instability of soundness banking induced by unsettled bank assets affected by high nonperforming loans |
| Management efficiency (M) | Management measures the efficiency of the company to minimize and reduce costs and increase profits to prevent the possibility of bank failures |
| Earnings (E) | Earning is a measure of profitability and there is an assessment of earnings and their level of relationship with peers in which the objective is to evaluate the effect of internally produced funds on the capital of the bank |
| Liquidity (L) | Liquidity is the capacity and ability of banks to repay and reimburse short-term obligations |
| Sensitivity to market risk (S) | Sensitivity to market risk is the measure of how resilient the assets, liabilities and net worth values of the bank are to changes in market conditions such as rate of interest, foreign exchange and inflation risk |
Source(s): Retrieved from (Sahut and Mili, 2011; Altan et al., 2014; Peltonen et al., 2015; Munir et al., 2017; Karim et al., 2018)
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