Financial Performance of Listed Commercial Banks in Tanzania: A CAMEL MODEL Approach.
DOI:
https://doi.org/10.26437.ajar.03.2022.16Abstract
Purpose: The study focused on analysing the financial performance of seven listed commercial banks at the Dar es Salaam Stock of exchange (DSE) for five years from 2016 to 2020. CAMEL model was utilised to fully assess the financial strength of these listed banks. CAMEL is an acronym that stands for capital adequacy, asset quality, management efficiency, earning quality and liquidity
Design/Methodology/Approach: Explanatory research design was applied fully to establish the cause and effect relationship that exists between the response variable (banks performance) and explanatory variables (capital adequacy, asset quality, management efficiency, earning quality and liquidity) of commercial banks listed at DSE in Tanzania. Secondary data were sourced from audited financial statements and annual reports. Pre regression analysis was done (multicollinearity test and Durbin-Watson test). Last but not least correlation and linear regression analysis were done.
Findings: The findings reveal that commercial banks listed at the DSE in Tanzania are mostly affected by management efficiency and capital adequacy
Research Limitations/Implications: This study focused on using CAMEL analysis on only seven listed commercial banks at DSE in Tanzania from 2016 up to 2020.
Practical implications: The study demonstrated the use of CAMEL analysis in measuring the listed commercial banks' performance in Tanzania. Thus this model can be used as the benchmark in deciding to yield better performance results for the listed commercial banks in Tanzania.
Originality/ Value: The study demonstrated the use of CAMEL analysis in measuring the listed commercial banks' performance in Tanzania.
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