Abstrakt

Evaluation of financial soundness of selected commercial banks in Nigeria: An application of Bankometer S-score model.

Onyema JI, Okey N, Precious O*, Amadi SN

This study examines the financial soundness of ten commercial banks in Nigeria. Rather than using other models like CAMELS framework or CLSA-Stress test, a new effective model for measuring soundness of banks has been used in this study named “Bankometer S-score model”. Using this model, soundness of selected banks has been measured for a period of fifteen years (2000-2015). The Bankometer S-score model revealed that 2 banks; Bank G and D are at the top of the list having scores greater than 70 (126 and 113 respectively) indicating that the two banks are sound (S>70) and are in very healthy states whereas eight of the banks; Banks A, B, C, E, F, H, I and J have their scores below fifty (S<50) indicating that they are experiencing financial difficulties and high risk according to the Bankometer model. The study went further to test the significant difference of the variables in the Bankometer model using the Friedman rank test, the result showed that there is a significant difference in the banks studied using the Bankometer S-score model. Finally, this study concludes that Bankometer S-score model will definitely help the internal management of any bank in determining insolvency issues and removing the shortcoming generated from inefficiency in banking operations.