Assessing Performance of Commercial Banks in Pakistan: A Study on Finance Innovation with Camel Model Application

Abstract

For the competitiveness of commercial banks, trade finance innovation is playing an essential role in Pakistan. Currently, modern banking sector is converting into more complex system. Assessing banking sector of Pakistan is a critical and complex task. There are various key factors which need to be addressed while evaluating performance of banks. A sound financial position of banks is extremely important to not only the depositors but also for employees, shareholders and the whole economy. As a result, efforts have been done in past researches to measure the actual financial position of banks in an effective manner. In this study, an effort has been made to analyze the financial performance of 10 commercial banks operating in Pakistan. This study used CAMEL model for assessing the performance of banks. Through this model, the position of the banks under the study is evaluated; so far as their capital adequacy, asset quality, earning analysis, management capability and liquidity is concerned. The study reveals that the financial performance of Faysal bank is sound and satisfactory in all key aspects. This study is important for aiding business investors to recognize shortcomings and qualities for describing policies and methodologies that will make a sound and prosperous banking system in Pakistan.

Keywords: Capital adequacy, asset quality, management capability, financial performance, commercial banks

Cite this Article

Faisal Mustafa, Faiza Siddiqui, Ambreen Khursheed et al. Assessing Performance of Commercial Banks in Pakistan: A Study on Finance Innovation with Camel Model Application. OmniScience: A Multi-disciplinary Journal. 2018; 8(1): 38–45p.