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<p>The purpose of this study is to explore the relationship between return on assets (ROA) and indicators from the CAMELS model. In addition, compare the performance of third- and fourth-generation banks in Bangladesh for the period 2013–2023, using the CAMELS rating model. By using the percent root test, the variables are stationary at the first difference; the results of the Im, Pesaran, and Shin (IPS) percent root and Hausman tests are the recommended fixed-effect models and FMOLS models to measure output. Evaluating the regression result for the third-generation banks, it is observed that capital adequacy and sensitivity to market risk have a significant positive relationship with return on assets (ROA), whereas asset quality, management efficiency, and liquidity ratio have an insignificant negative correlation with ROA. Simultaneously, we observe a positive yet insignificant relationship with earning capacity. Furthermore, evaluating the fourth-generation banks, it is observed that capital adequacy and asset quality have a significant negative impact, and management efficiency and sensitivity have a significant positive effect on ROA. This study has the potential to contribute to and be applicable to the financial sector in Bangladesh by accumulating new concepts and conducting a comparative analysis of financial performance between generations of banks.</p>

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The CAMELS model applications in selected third and fourth generation banks in Bangladesh

  • 期刊论文

  • 发表日期：

    2026年5月4日

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  • Fahad Zeya,
  • Abul Hasnat M Salimullah,
  • Nargis Sultana,
  • Ahsan Habib,
  • Md. Hasanur Rahman,
  • Md. Easir Siam

摘要

The purpose of this study is to explore the relationship between return on assets (ROA) and indicators from the CAMELS model. In addition, compare the performance of third- and fourth-generation banks in Bangladesh for the period 2013–2023, using the CAMELS rating model. By using the percent root test, the variables are stationary at the first difference; the results of the Im, Pesaran, and Shin (IPS) percent root and Hausman tests are the recommended fixed-effect models and FMOLS models to measure output. Evaluating the regression result for the third-generation banks, it is observed that capital adequacy and sensitivity to market risk have a significant positive relationship with return on assets (ROA), whereas asset quality, management efficiency, and liquidity ratio have an insignificant negative correlation with ROA. Simultaneously, we observe a positive yet insignificant relationship with earning capacity. Furthermore, evaluating the fourth-generation banks, it is observed that capital adequacy and asset quality have a significant negative impact, and management efficiency and sensitivity have a significant positive effect on ROA. This study has the potential to contribute to and be applicable to the financial sector in Bangladesh by accumulating new concepts and conducting a comparative analysis of financial performance between generations of banks.