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An Investigation on Financial Performance of Commercial Banks in Sri Lanka: Applicability of the CAMEL Model

Authors:

Shanika Lakmali Kumarasinghe ,

South Eastern University of Sri Lanka, LK
About Shanika Lakmali
Assistant Lecturer
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Athambawa Jahfer

South Eastern University of Sri Lanka, LK
About Athambawa
Senior Lecturer
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Abstract

This investigation was carried out to extensively examine the financial performance of Sri Lankan licensed Commercial banks for the period 2010- 2019. This includes both state owned and private owned banks. The CAMEL approach was used in measuring banking performance and used capital adequacy, asset quality, management quality, earnings ability and liquidity position as independent variables and return on assets for measuring financial performance as the dependent variable. Data were collected among 12 licensed commercial banks for the period from 2010 to 2019 and the CAMEL model was tested. The results reveal that capital adequacy and liquidity position are positively related to the financial performance of commercial banks in Sri Lanka, while others were not supported under the period of study. This is mostly useful for Sri Lankan banks and other policy makers in enhancing the financial performance of banks.
How to Cite: Kumarasinghe, S.L. and Jahfer, A., 2021. An Investigation on Financial Performance of Commercial Banks in Sri Lanka: Applicability of the CAMEL Model. Sri Lanka Journal of Marketing, 7(3), pp.166–180. DOI: http://doi.org/10.4038/sljmuok.v7i3.78
Published on 31 Dec 2021.
Peer Reviewed

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