Financial Soundness Evaluation of Selected Commercial Banks in Bangladesh: An Application of Bankometer Model

Abstract

This study examines the financial soundness of twenty four private commercial banks operating in Bangladesh. Rather than using other models like CAMELS framework or CLSA-Stress test, a new effective model has been used in this study named “Bankometer”. This model has been developed according to the guidelines of IMF (2000) for measuring soundness of banks and used by many researchers for its simplicity. Using this model, soundness of selected banks has been measured for the year 2015 and again consistency of soundness of these banks has been evaluated for long period covering (2010-2015). The study reveals that all the banks have ensured sound financial status individually and banking industry has always been in favorable position during the period (2010-2015). Finally, this study concludes that “Bankometer” model will definitely help the internal management of any bank in determining insolvency issues and removing the shortcoming generated from inefficiency in banking operations.

Keywords: Financial Soundness, Private Commercial Banks, Bankometer model, S-Score.