A comparative study on financial performance of foreign and domestic commercial banks in Sri Lanka: An application of CAMEL rating system

Abstract

Introduction Banks are playing a major role of the financial system of all countries as well as in Sri Lanka. Sri Lankan banking system can be divided into two as commercial banks and special purpose banks. This study arms to find the performance of the foreign commercial banks in Sri Lankan economy and compare it with domestic commercial banks. To provide a satisfactory service to the customers, each institute should aware of their turning points. In the view of customers, it is very important that the awareness of the possibility of negotiation with the institutions. This study considers performance of those banks by using various indicators which is not focused in the previous literature. There are a number of studies in this area. They have focused different aspects of the banking sector. A comparative study on state and private sector commercial banks in Sri Lanka for the time period of 2008-2012 has been conducted by applying CAMEL rating system (Anojan and Nimalathasan, 2014). In the study they have stated that private sector banks are better than state banks in the performance of capital, earning to the asset quality and management soundness of the banks in Sri Lanka.