Supervisory Review Process According To Capital adequacy, Asset quality, Earnings, and Liquidity (CAEL) Criterion Study of the Sudanese Banks Situation

Abstract

This study aims to assess the stability in the Sudanese banks performance during the period 2002-2008 and to identify the most important factors in determining the degree of CAEl criterion. Whereas the Central Bank of Sudan has already used the descriptive statistics to evaluate the risk likelihood which flags to banks failure, but these old techniques were less efficient to assess. Therefore, the researcher -in attempt to promote the central bank ability of supervision- suggests an Econometrics model to use in supervision. The data of study are collected by the Department of prevention control and inspection in the Central Bank of Sudan, through the on-site surveillance 2002-2007. Besides, another type of data which are compiled from the department of prevention control and inspection in the bank of Khartoum through quarterly off-site surveillance reports data for the period (2002-2008). In the analytical site the research uses the descriptive statistics, factor analysis technique and logistic regression, using NCSS-PASS software as well as Minitab and SPSS. The study discovers that the banks which are classified in the evaluation of strong and satisfactory have no sudden fall in the coming year to the unsatisfactory rating. Also, the dissertation reaches to a model estimation to illustrate the relationship between the levels of CAEl criterion with following variables: ratio of loans / deposits, liquid assets / total assets, liquid assets / deposits, outgo / income, and indicator of capital adequacy by using technique of ordinal logistics regression