Camel Rating System: A Case Study

which are Federal Reserve, FDIC, National Credit Union Administrators and OCC and the other financial regulatory credit rating agencies to provide a correct summary of banks financial performance. In 1979, the Uniform Financial Institutions Rating System (UFIRS) was executed in U.S. banking institutions and after that globally, following a recommendation by the Federal Reserve of U.S. The system became internationally known with the acronym of CAMEL Rating System, and the system was established by ACCION (Americans for Community Co-operation in other nations). In 1980’s to help regulator banks of North America (Milligan,2002,p 70) CAMEL methodology adopted by North America Bank regulators to know the financial and managerial reliability of commercial lending institutions. The CAMEL approach was developed by

It effects, the bank supervisor depend regularly on the off- site examination to supplement the on-site inspection. On the other hand, it provides up-day to day, relevant and reliable financial information, and provides the source for financial assessment of the bank analyses. Off-site surveillance highlights the risk exposure based on the annual or quarterly financial data, and it helps the banks ‘supervisors schedule the exams on those suspected banks. Gilbert et al. (2002) suggest that most of the off-site surveillance is based on the call reports (reports of condition and income filled by Banks) which is produced by the bank supervisory agencies, for the quarter prior to the examination. The bank supervisors go through the results of on-site inspection and suggest the potential full-scope examinations, if necessary; and they also compares the bank’s performance to that of its peer in the industry. There were two commonly used off-site tools are supervisory screens and econometric