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CAMELS Rating System

The CAMELS rating system is used by bank supervisory authorities to rate institutions according to six key factors: C for Capital adequacy, A for Asset quality, M for Management quality, E for Earnings, L for Liquidity, and S for Sensitivity to Market Risk. Banks are given a score from 1 to 5 for each factor, with an average score below 2 indicating a high-quality institution and above 3 representing a less-than-satisfactory bank requiring attention from supervisory authorities.

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347 views

CAMELS Rating System

The CAMELS rating system is used by bank supervisory authorities to rate institutions according to six key factors: C for Capital adequacy, A for Asset quality, M for Management quality, E for Earnings, L for Liquidity, and S for Sensitivity to Market Risk. Banks are given a score from 1 to 5 for each factor, with an average score below 2 indicating a high-quality institution and above 3 representing a less-than-satisfactory bank requiring attention from supervisory authorities.

Uploaded by

Swastik Nandy
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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Definition of 'CAMELS Rating System'

An international bank-rating system where bank supervisory authorities rate institutions according to six factors.

The six factors are represented by the acronym "CAMELS."

Investopedia explains 'CAMELS Rating System'


The six factors examined are as follows: C - Capital adequacy A - Asset quality M - Management quality E - Earnings L - Liquidity S - Sensitivity to Market Risk Bank supervisory authorities assign each bank a score on a scale of one (best) to five (worst) for each factor. If a bank has an average score less than two it is considered to be a highquality institution, while banks with scores greater than three are considered to be less-thansatisfactory establishments. The system helps the supervisory authority identify banks that are in need of attention.
Read more: http://www.investopedia.com/terms/c/camelrating.asp#ixzz2DDLMJEMC

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