In our study, we focus on evaluating the CAMEL rating system, a well-established method for assessing the performance of banks, specifically within the context of the private banking sector. Our primary objectives in this research are to ascertain the rankings of these private banks based on both CAMEL
composite and CAMEL overall ratings and to investigate how these ratings correlate with the total deposits of these banks over the period spanning from 2018 to 2022. Our methodology encompasses four distinct phases. In the initial phase, we compute the essential financial ratios that constitute the CAMEL composites for each bank. In the subsequent phase, we assign rankings from 1 to 5 to each bank according to their performance in each CAMEL composite for each year under consideration. In the third phase, we determine the overall rankings of private banks based on the CAMEL composite and CAMEL overall assessments. Lastly, in the fourth phase, we employ a regression model, with the CAMEL financial ratios' rankings as independent variables and the total deposits of the banks as the dependent variable. By utilizing the stepwise regression method, our results demonstrate that the most effective regression model yields an adjusted R-squared value of 73.4% and a standard error of approximately 0.58. Our findings indicate several key insights. Firstly, capital, as measured by the Capital Adequacy Ratio (CAR), and management efficiency, represented by an efficiency ratio, both have positive effects on banks' total deposits. Earnings, specifically through the Return on Equity (ROE) proxy, and liquidity, as indicated by the loans to deposits
ratio, also exert positive influences on total deposits. Conversely, earnings, calculated as the net interest income to net revenue ratio, and liquidity, assessed through the Cost of Current and Savings Accounts (CASA), have a negative impact on total deposits. Notably, other ratios related to asset quality and the remaining financial metrics do not appear to significantly affect total deposits in the case of banks.