CAMEL MODEL FOR FINANCIAL PERFORMANCE ANALYSIS OF NEPALESE COMMERCIAL BANKS A

Abstract

The purpose of the study is to look at how CAMEL variables affect the financial performance of commercial banks in Nepal. In order to determine the impact of CAMEL factors on profitability, three of Nepal's largest commercial banks were chosen for this investigation. Data is gathered from publications such as Unified Directives, Nepal Rastra Bank Report, annual statement of selected sample banks, and others. Three commercial banks' secondary data for the years 2013/14 to 2022/23 were used in the study. A study framework was created in order to draw conclusion. Causal and descriptive study design was used. In this research, the profitability indicators for ROA and ROE are considered dependent variables. The CAMEL variables, which include the cash and bank balance ratio, earnings per share, non-performing loan ratio, capital adequacy ratio, government security ratio, asset quality ratio and management efficiency ratios, are considered independent variables that determine profitability. Data were gathered from Nepal Rastra Bank's website as well as other relevant official websites of affiliated banks. SPSS and Microsoft Excel were used for data analysis purpose. The study's findings indicate that there is a positive and negative correlation between the dependent variables, ROA and ROE, and the independent variables. There is a positive correlation between the correlation coefficients of ROA and NPLR and EPS, and a negative correlation between CAR, MER, CBBR, and GSR. The independent variables and ROE have both positive and negative correlations. While CAR, NPLR, MER, CBBR, and GSR have negative correlations, ROE and EPS have positive correlations. Key Words: Capital Adequacy Ratio, Asset Quality Ratio, Non-Performing Loan Ratio, Management Efficiency Ratio, Earning Per Share, Cash and Bank Balance Ratio, Government Securities Ratio, Return on Assets, Return on Equity.