Applying the CAMEL model to assess performance of commercial banks: empirical evidence from Vietnam

  • Received December 25, 2019;
    Accepted June 11, 2020;
    Published June 23, 2020
  • Author(s)
  • DOI
    http://dx.doi.org/10.21511/bbs.15(2).2020.16
  • Article Info
    Volume 15 2020, Issue #2, pp. 177-186
  • TO CITE АНОТАЦІЯ
  • Cited by
    1 articles
  • 432 Views
  • 14 Downloads

Creative Commons License
This work is licensed under a Creative Commons Attribution 4.0 International License

The paper aims to investigate the impact of CAMEL components on the financial performance of commercial banks in Vietnam. Three econometric models are built using four CAMEL’s crucial indicators as independent variables (capital adequacy, asset quality, management effectiveness, bank liquidity) and return on assets (ROA), return on equity (ROE), and net interest margin (NIM) as proxies for commercial banks’ financial performance – dependent variables. The research sample includes 31 Vietnamese commercial banks over the 6-year period, from 2013 to 2018. The results show a better fit of the fixed effects model (FEM) in terms of the research methodology compared to the ordinary least squares (OLS) and random effects model (REM). It was found that capital adequacy, asset quality, liquidity and management efficiency affect the performance of Vietnamese commercial banks.

Acknowledgement
This research is funded by National Economics University (NEU), Hanoi, Vietnam. The authors thank anonymous referees for their contributions and the NEU for funding this research.

view full abstract hide full abstract
    • Table 1. Dependent variable measurement
    • Table 2. Independent variable measurement
    • Table 3. The impact of independent variables on ROA
    • Table 4. The impact of independent variables on ROE
    • Table 5. The impact of independent variables on NIM
    • Table 6. Summary of the impact of each factor on the performance of Vietnamese commercial banks
    • Conceptualization
      Anh Huu Nguyen, Hang Thu Nguyen, Huong Thanh Pham
    • Formal Analysis
      Anh Huu Nguyen, Hang Thu Nguyen, Huong Thanh Pham
    • Investigation
      Anh Huu Nguyen
    • Methodology
      Anh Huu Nguyen, Hang Thu Nguyen, Huong Thanh Pham
    • Resources
      Anh Huu Nguyen
    • Supervision
      Anh Huu Nguyen
    • Validation
      Anh Huu Nguyen
    • Writing – original draft
      Anh Huu Nguyen, Hang Thu Nguyen, Huong Thanh Pham
    • Writing – review & editing
      Anh Huu Nguyen
    • Data curation
      Hang Thu Nguyen, Huong Thanh Pham
    • Software
      Hang Thu Nguyen, Huong Thanh Pham
    • Visualization
      Hang Thu Nguyen, Huong Thanh Pham