CAMELS Rating System
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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." |
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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 high-quality institution, while banks with scores greater than three are considered to be less-than-satisfactory establishments. The system helps the supervisory authority identify banks that are in need of attention. |
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