PROBLEMS OF BANKS RATING BY CAMELS SYSTEM

For effective implementation of the banking regulation and banking supervision different methods of analysis of banks are used, among which we can identify CAMELS expert rating system. The priority of CAMELS system is recognized and legally supported, but the assessment for this method has some problems both in the organization and in the evaluation criteria. Among the major weaknesses of CAMELS system we should identify the subjectivity of assessment by experts of the bank, insufficient quality of bank management that significantly influences the rating of components. Amount of supervision and planning of inspections depends on the particular institutions; expert analysis requires a large number of performers. Despite the drawbacks, most supervisors in the world retained CAMELS as part of its supervisory functions. However, as the risk-based supervision will be implemented more widely in the world, CAMELS system transformation in the risk evaluation system is possible. Solving this problem will provide an effective tool of integrated rating assessment for every bank.