Performance Evaluation of Banking Sector in Pakistan: An Application of Bankometer

Ability to predict which bank is vulnerable to financial distress is of critical importance to investors, creditors, accountholders and many other stakeholders. An effort has been made to develop and evaluate a new model called ‘bankometer’. To confirm the accuracy of bankometer, it has been applied on individual banks covering the period 1999-2002 for gauging the solvency of each bank in Pakistan and the results has been compared with CAMEL and CLSA-stress test. This is an initial attempt to develop a scale which could be applied at global level and prescribes a procedure to gauge the vulnerability of an individual bank.