Development of a multi-criteria decision-making model for comparing the performance of Turkish commercial banks

Abstract

Purpose

In this study, financial performance evaluation model is developed for banks aims to measure and compare the performances of banks based on their financial ratios.

Design/methodology/approach

Regression-AHP (Analytic Hierarchy Process)-VIKOR (Vise Kriterijumska Optimizacija I Kompromisno Resenje) integrated methodology is used. First, a literature review is done to find various bank performance measurement models with their financial metrics being compared. Then, pair-wise comparison matrices are used to find the relative weights of criteria (financial ratios) and finally VIKOR method is used to rank the banks.

Findings

It is believed that an AHP-based VIKOR framework helps to take up the explicit account of multi-criteria decision making (MCDM) methodologies in decision making and for selecting the best bank in the Turkish economy.

Research limitations/implications

In this paper, only selected financial ratios are used and analyzed for the multi-criteria decision-making (MCDM) method.

Originality/value

The systematic solution procedure of performance evaluating the banks helps the decision-makers to carry out performance evaluation studies for improving economic and managerial performance. This comparative study and analysis of bank performance using the regression-AHP-VIKOR combined model is presented for the first time. The authors have not become aware of any such studies in their literature review. This paper is an original framework of the application of the regression-AHP-VIKOR on the various financial performance metrics.

Citation

Ic, Y.T., Celik, B., Kavak, S. and Baki, B. (2021), "Development of a multi-criteria decision-making model for comparing the performance of Turkish commercial banks", Journal of Advances in Management Research, Vol. 18 No. 2, pp. 250-272. https://doi.org/10.1108/JAMR-05-2020-0083