CAMELS Rating System
An international bank-rating system with which bank supervisory authorities rate institutions according to six factors. The six areas examined are represented by the acronym "CAMELS."
Investopedia Commentary
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 1 (best) to 5 (worst) for each factor. If a bank has an average score less than 2 it is considered to be a high-quality institution while banks with scores greater than 3 are considered to be less-than-satisfactory establishments. The system helps the supervisory authority identify banks that are in need of attention.
Related Links
What Are Central Banks?
The Federal Reserve (the Fed) Tutorial
See also: Bank, Liquidity, Market Risk, Quality of Earnings
Also spelled: CAMELS