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Determining the Priorities of CAMELS Dimensions Based on Bank Performance

  • Mehmet Pekkaya
  • Figen Erol Demir
Chapter
Part of the Contributions to Economics book series (CE)

Abstract

Banks’ performances are important not only for the stability/growth of the firms and economic situation of a country; it is also important for the stability/growth of the world economy. The aim of this study is to determine the priorities of CAMELS dimensions with respect to bank performance via AHP method and to present the results as an information to researchers, investors and decision-makers. Furthermore, this study shows the feasibility of many statistical hypothesis tests by separately generated priority series from expert’s views based on performance and bankruptcy risk of banks.

CAMELS, used for bank performance appraisal, is a financial ratio analysis comparing the ratios of banks with the industries. Along with evaluating the determined priorities of CAMELS dimensions based on performance of banks, the differences of the views between the priorities based on risk of bankruptcy and performance of banks, the view differences according to the demographic characteristics of the experts, etc., are also examined. According to analysis, “Asset” (24.75%) is the most important dimension of CAMELS, and then “Earnings” (19.16%), “Liquidity” (18.54%) and “Management” (17.68%) are thought as following important dimensions with respect to bank performance. Dimensions of “Sensitivity to market risk” (11.11%) and “Capital” (10.03%) are observed as weak dimensions.

Keywords

MCDM AHP Hypothesis testing CAMELS Bank performance 

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Copyright information

© Springer International Publishing AG, part of Springer Nature 2018

Authors and Affiliations

  • Mehmet Pekkaya
    • 1
  • Figen Erol Demir
    • 2
  1. 1.Business AdministrationBülent Ecevit UniversityZonguldakTurkey
  2. 2.Bülent Ecevit UniversityZonguldakTurkey

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