Impact of Camels Ratios on Financial Performance of Banks: Empirical Evidence In Pakistan.

Abstract

The purpose of this study is to look at the impact of CAMEL model on the financial performance of Pakistani commercial banks. Using five CAMEL key indicators two econometric models are constructed as independent variables (capital adequacy, asset quality, management quality, earning ability, and bank liquidity) and return on assets (ROA) and return on equity (ROE) as proxies for commercial bank financial performance as dependent variables. Over a 6-year period, from 2015 to 2020, the research sample includes 15 Pakistani commercial banks. When compared to the ordinary least squares (OLS) and fixed effects models, the results suggest that the random effects model (REM) fits the research technique better. The performance of Pakistan's commercial banks is influenced by management efficiency and earning capacity.