Abstract
Banking sector plays a vital role in the economic growth. In this paper, an effort has been made to assess the financial execution of the ten commercial banks working in Pakistan and the data has been taken for seven years i.e., 2007-2013. Moreover, data were also assembled from articles, papers, the World Wide Web (Internet), Specialized International Journals, and relevant previous studies. In the present study an endeavor was made to evaluate the execution and financial accuracy of commercial banks using CAMEL approach. CAMEL is the supervisory and administrative framework implemented by State Bank of Pakistan. It consists of five critical indicators to assess the soundness and execution of the bank. These segments are Capital adequacy, Asset quality, Management, Earning and Liquidity. The Capital adequacy, Asset quality, Management efficiency, Earning and Liquidity are taken as independent variables (financial measures) with a view to study their impact on the firm‘s performance. Earnings per share (EPS) is used as a dependent variable. Measurable apparatuses like descriptive statistics, Correlation and regression analysis were used to gauge the execution of the banks. The results show that total deposit to equity, non-performing loans to gross advances, non-performing loans to equity, Admin Exp to Interest Income Ratio, Gross Advances to Total Deposits Ratio were significantly but negative correlated with a bank’s performance. The Return on Assets and Return on Equity were significantly and positively correlated with a bank’s performance. The interest income to total assets ratio is statistically insignificant with bank’s performance, whereas the regression result show that INT is statistically significant with bank’s performance. The cash ratio is also showing insignificant correlated bank’s performance, whereas the regression result shows that the cash ratio is statistically significant with a bank’s performance.
Highlights
Financial Sector is important for the economic development and prosperity of the country
The Capital adequacy, Asset quality, Management efficiency, Earning and Liquidity are taken as independent variables with a view to study their impact on the firm‘s performance
The results of the study, lies in the way that the negative relationship between capital adequacy and execution highlights the way that different endeavors by the controllers to audit regularly the capital base of the keeping money division is not borne out of the plan to enhance the gains of the banks
Summary
Financial Sector is important for the economic development and prosperity of the country. Financial sector works as the backbone of the economy that controls the money supply. Banking is a very important sector because the development of the finance, and the banking system, promote economic growth. Banks are important for the economy and organizations in particular at the time of declines and money related crisis. Industrial, agricultural and commercial development of a country is not imaginable without an efficient banking system. Sometimes bank truly don't respond to the crisis, comparing the later past financial crisis 2007-09, it makes the condition more terrible for economic improvement. It is significant to observe the performance of the banks with the administrative prerequisites [1]
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