Putu Anom Mahadwartha

Does Basel II Accord Classification Align with Bank Performance

Research in banking less focuses on bank obedience. The issue of bank obedience describe the roles of central bank in maintain the banks health through rules and regulation such as Basel II, and CAMEL. This research investigates the obedience of bank on CAMEL and the effect of their obedience on bank’s performance. Therefore this research conduct test to separate between banks based on their obedience to central banks roles. The research composed two main hypotheses which are focused on positive effect of obedience on bank’s performance and the differences between less and fully comply banks. Samples are banks that listed on Bursa Efek Indonesia (Indonesian Capital Market) from 2000 until 2010, with multiple variable regression. The result showed the implementation of Basell II on banks, will force banks to increase their credit worthiness not only their credit quality. Banks will have to decrease their risk which means lower return as well.