Abstract
The aim of the study in this paper is to show how the performance of banks can be evaluated by ranking them based on Balanced Scorecard (BSC) and Multicriteria Decision Making (MCDM) methods. Nowadays, assessing the performance of companies is a vital work for finding their weaknesses and strengths. The banking sector is an important area in the service sector. Many people want to know which bank performs best when entrusting their money to them. For assessing the performance of banks, BSC can be used. This method helps to translate strategic issues to meaningful insights for the respective financial institutions. After that, the banks will be ranked based on performance indicators by the Weighted Aggregated Sum Product Assessment (WASPAS) method. Because this method is based on a decision matrix, weights are required. To find such weights, the Step-wise Weight Assessment Ratio Analysis (SWARA) method is applied. The results show that the International Bank of Colombia has a much better performance than other Colombian banks. Besides, further insights regarding the evaluation process based on BSC, SWARA, and WASPAS are obtained.
Highlights
Nowadays, many factors affect the performance of banks
Data Envelopment Analysis (DEA) is a method of evaluating companies based on linear programming and related models based on inputs and outputs of a company
Step-wise Weight Assessment Ratio Analysis (SWARA) (Keršuliene et al, 2010) is one of the Multicriteria Decision Making (MCDM) methods which are based on a rational dispute resolution method (Keršulienė & Turskis, 2011)
Summary
Many factors affect the performance of banks. One of the most important is globalization (Claessens & Horen, 2014), which induced many banks to revise their performances and try to improve them. The objective of this research is to assess and measure the performance of banks in order to rank them based on various indicators. This ranking helps customers get insights into the banks’ performances and make a decision about entrusting their money to them. The aim of this paper is to prioritize six selected banks in Colombia, based on Performance Indicators (PIs). These performance indicators are obtained from a Balanced Scorecard (BSC) model. Banks are ranked based on these PIs, the obtained weights, and the Multicriteria Decision Making (MCDM) method WASPAS.
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