CAMELS Rating System,
Definition of CAMELS Rating System:
CAMELS is a recognized international rating system that bank supervisory authorities use in order to rate financial institutions according to six factors represented by its acronym. Supervisory authorities assign each bank a score on a scale. A rating of one is considered the best, and a rating of five is considered the worst for each factor.
Six factors used internationally to rate banking systems. The factors are rated on a scale of one to five, and any score higher than three is less-than-satisfactory, and are the source for the acronym CAMELS that stands for capital adequacy, quality of assets, quality of management, earnings, liquidity, and sensitivity to market risks.
Banks that are given an average score of less than two are considered to be high-quality institutions. Banks with scores greater than three are considered to be less-than-satisfactory institutions. The acronym CAMELS stands for the following factors that examiners use to rate bank institutions:.
How to use CAMELS Rating System in a sentence?
- CAMELS is an international rating system used by regulatory banking authorities to rate financial institutions, according to the six factors represented by its acronym.
- The CAMELS acronym stands for "Capital adequacy, Asset quality, Management, Earnings, Liquidity, and Sensitivity.".
Meaning of CAMELS Rating System & CAMELS Rating System Definition