Abstract:
The current study seeks to investigate the importance and efficiency of the
American banking evaluation system (CAMELS), as well as its contributions in
measuring and controlling risks and results in activating an internal control
system at the National Bank of Algeria. Through devoting the principle of
immediate self-monitoring in a try to eliminate the time difference between
supervisory control and self-monitoring. The aim is to reach results that will
enable the bank administration to apply and adopt a permanent and effective
system .
This was done through forming matrices to classify the bank depending
on each indicator from CAMELS system, and linking it to the level of
effectiveness of the internal control system according to the requirements
contained in the Algerian Bank system No. 08/11 .
We used the annual management reports submitted to the board of
directors, and its website, to extract data for the period from 2012 to 2018.
The present study showed that the banking rating system applied in
Algeria, which completely inspired by the CAMELS, plays an important role in
judging the level of effectiveness of the internal control system in the National
Bank of Algeria. The rating obtained from the capital adequacy index (C) shows
that the internal control system in the National Bank of Algeria is considered
effective to some extent with satisfactory management of funds and assets and
satisfactory control of risks and governance. While the rating obtained from the
quality of assets, (A) showed that the internal control system was moderately
effective with relative respect to the established limits and internal procedures. It
was also accompanied by defects at the level of risks management concerning
loans, concentration and non-payment, and operational and legal risks. In
addition to a lack of respect for internal procedures. The rating obtained from
the liquidity index (L) also showed that the bank’s internal control system
witnessed different levels, passing from the average level of effectiveness at the
beginning of the period to its lowest level with poor management in 2016.
Eventually, reaching a medium level of effectiveness at the end of the period as
a result of unsatisfactory management for funds and assets with less control over
liquidity that was stated in Article 02 and in the requirements of Part One and
Three of Regulation 11/08
