Evaluation of Financial Performance of Commercial Banks in Bangladesh: Comparative Study Based on CAMEL Approach

Abstract

Banking industry plays a very important role to the economy of Bangladesh and the financial performance measurement is one of the major considering factors for the banks. The study attempts to analyses and compares the financial performance of Islamic and Conventional commercial banks operating in Bangladesh during 2011 to 2015 using secondary data by applying CAMEL model and other relevant statistical tools. The study revealed that Islamic banks perform better than Conventional banks in terms of capital adequacy, assets quality, and management quality and earnings ability. However, Islamic banks had a weaker liquidity position in comparison to Conventional banks. This study also found that, there is no significant difference between the two banking categories except liquidity position. This study also revealed that under Islamic banking system Al-Arafah Islamic Bank and Exim Bank Limited performed better than other Islamic banks and under Conventional banking system Mercantile Bank Limited and Dutch-Bangla Bank Limited performed better than other conventional banks among the selected banks in the selected time period. The findings of the study will help to increase the confidence and consciousness in the partaking banks in Bangladesh. Finally, some suggestions and recommendations have been provided to increase financial performance of selected banks which will insure those banks sound positioning in banking sector of Bangladesh.

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