Performance Evaluation Of Banks Research Articles

Analysis of Machine Learning in Classifying Bank Profitability with Corruption Factor

Corruption, which is generally defined as the abuse of authority for personal benefit, is not a recent phenomenon and has become a major issue in almost all countries throughout the world. Indeed, a high level of corruption increases bank non-performing loans which in turn reduces profitability and intensifies the fragility of the banking industry. Given the adverse impacts, corruption has been used as one of the factors in bank performance evaluation. As research on corruption-bank performance with machine learning techniques is rarely reported in the literature, this paper presents the empirical comparison of different machine learning algorithms for classifying bank profitability. Besides machine learning performance comparisons, this paper presents the analysis of machine learning features importance to justify the effect of corruption factor in the different machine learning algorithms for classifying bank profitability. The results indicated that all the tested machine learning algorithms present a good ability of classifying bank profitability at accuracy percentages above 70% but corruption index has contributed very minimal effect to the machine learning performances. The framework of this research is highly reproducible to be extended with a more in-depth analysis, particularly on the bank profitability factors as well as on the machine learning algorithms.

EVALUATING NPF OF MURABAHA SETTLEMENT STRATEGY: PERSPECTIVE OF RISK MANAGEMENT AND DSN MUI'S FATWA

Non-Performing Financing (NPF) is one of the indicators in evaluating bank performance. Financing products with murabaha contracts are one of the products that dominate the Islamic banking industry where the percentage of its NPF will also affect profits. This study examines the strategy implemented by one of the Bank Syariah Indonesia (BSI) Area Office in Aceh Province towards Murabaha NPF from two perspectives, risk management and Fatwa DSN-MUI using a descriptive approach. The results conclude that in handling NPF, banks begin with negotiation/mediation approach, then gradually rescheduling, restructuring, reconditioning, execution of collateral/auctions and litigation. Those steps are in accordance with risk management concept in terms of preventing NPF and consistent with Fatwa DSN-MUI in terms of NPF settlement. However, among the obstacles are bad character debtors so that the settlement process will take a long period of time and keep being suspended. This is certainly a significant viewpoint for banks that educating and socializing the management of financing must be explained from the beginning and ensure that debtors understand all related applicable bank regulations.
 Keywords: Murabaha Financing, Non-Performing Financing, Risk Management, Fatwa DSN-MUI, Islamic Banks

Performance evaluation of Chinese commercial banks by an improved slacks-based DEA model

The national economy heavily relies on the banking sector, and researchers have been focused on discovering the most effective method of enhancing bank's overall efficiency. Data Envelopment Analysis (DEA) is a commonly utilized tool for measuring banking efficiency. We proposed an improved slacks-based measure model (SBM) with undesirable outputs using a by-production framework. In such case, the bank's operating process is considered as a parallel system. Inputs are categorized into interest costs and operating costs, which are then evaluated in two separate parallel stages. In the first stage, outputs are categorized into interest income and non-interest income, which are shared and considered as final outputs. In the second stage, non-performing loans are deemed as undesirable outputs. This proposed approach splits bank efficiency into two parallel stages, enabling us to identify the source of overall inefficiency, and effectively capture the efficiency differences between the two types of costs. To demonstrate the feasibility of the proposed approach, we have successfully applied it to 36 commercial banks in China from 2016 to 2021. The empirical results of the research prove that the changes of the banks' overall efficiencies were mainly due to the changes of stage 2. And this approach provides a rich source of information to assist in decision making.

Fuzzy Analytic Network Process with Principal Component Analysis to Establish a Bank Performance Model under the Assumption of Country Risk

In recent years, bank-related decision analysis has reflected a relevant research area due to key factors that affect the operating environment of banks. This study’s aim is to develop a model based on the linkages between the performance of banks and their operating context, determined by country risk. For this aim, we propose a multi-analytic methodology using fuzzy analytic network process (fuzzy-ANP) with principal component analysis (PCA) that extends existing mathematical methodologies and decision-making approaches. This method was examined in two studies. The first study focused on determining a model for country risk assessment based on the data extracted from 172 countries. Considering the first study’s scores, the second study established a bank performance model under the assumption of country risk, based on data from 496 banks. Our findings show the importance of country risk as a relevant bank performance dimension for decision makers in establishing efficient strategies with a positive impact on long-term performance. The study offers various contributions. From a mathematic methodology perspective, this research advances an original approach that integrates fuzzy-ANP with PCA, providing a consistent and unbiased framework that overcomes human judgement. From a business and economic analysis perspective, this research establishes novelty based on the performance evaluation of banks considering the operating country’s risk.

Financial Performance of Cuddalore District Central Cooperative Bank Limited

This study utilizes both primary and secondary data to assess and analyze the financial performance of the Cuddalore District Central Cooperative Bank Limited. The secondary data was gathered from various sources such as profiles, books, magazines, and websites, while the primary data was collected through the annual report of the bank. The collected data underwent editing, coding, classification, and tabulation, and was further analyzed using various financial tools. Assessing a bank’s performance is crucial in today’s competitive banking landscape, as it enables them to develop their business strategies.Despite the ongoing use of financial ratio analysis by regulators for evaluating bank performance, opposition to this method persists, with opponents introducing new tools that aim to provide a comprehensive assessment of a bank’s overall efficiency. This research paper aims to determine the effectiveness of the CAMEL (Capital adequacy, Asset quality, Management quality, Earnings, and Liquidity) framework in capturing a bank’s overall performance. Additionally, it seeks to identify the relative importance weights of the factors within the CAMEL framework and recommend the most suitable ratios for bank regulators to use in evaluating efficiency.The data for this research is secondary and was collected from the annual reports of the Cuddalore District Central Cooperative Bank over a five-year period (2017-2022). Based on the findings, several suggestions were made to the bank, including providing financial advice to borrowers to enhance their performance and ensuring thorough scrutiny of members’ proposals before loan sanctioning.

The Possibility of Adopting Program and Performance Budget to Evaluate the Performance of Banks

This study examines program and performance budget and its role in evaluating bank performance. Program and performance budget represents a system for preparing a budget for all expenses allocated each year. The budgeting process begins for each job within the bank and is analyzed according to its needs and costs. Subsequently, a budget is prepared based on the requirements of the upcoming period, regardless of any increase or decrease compared to the previous one. Program and performance budget contributes to cost reduction by avoiding the fluctuations that occur in the budget of the previous period. However, it requires more time than traditional budgeting, which does not hinder its implementation. The study applied program and performance budget to a private bank listed in the Iraq Stock Exchange. The aim was to develop the banks budget by using program and performance budget as a tool for planning, control, and performance evaluation. The necessary applications were carried out to implement it, including identifying key programs and related activities, allocating expenses based on the categorization of those activities and programs, and excluding expenses unrelated to performance, which reflects efficiency in performance. The following were the main conclusions: 1. The possibility of implementing program and performance budget in banks to achieve effective accountability and control. 2. Defining actual achievement standards, measuring efficiency, and making decisions for future years. The study arrived at a set of recommendations, including: 1. The necessity of preparing financial and accounting data with minimal time, effort, and cost, and providing competent human, administrative, and accounting resources to implement program and performance budget without problems and difficulties. 2. Encouraging management to make strategic decisions based on the data of program and performance budget, as it helps in continuous evaluation and review of those decisions in order to face financial and economic crises and address unstable conditions.

Performance Evaluation of Co-operative Banks in India with Special References to Delhi NCR

In this paper we have considered some parameter tools, Data Analysis, Data Collection Method and introductory part regarding Assessing the Effectiveness of India's Cooperative Banks with Special References to Delhi NCR. In India, co-operative banks play a crucial role since they were set up to provide the country's rural population with banking services. The goal of its founding was to provide access to financial services and stimulate growth in rural areas.  They're crucial to India's progress economically and socially.  To better understand the challenges encountered by co-operative banks and provide solutions to help them thrive, this research examined their organizational framework, development, and performance. The information comes from several SCB, DCCB, and PACS yearly reports. Percentages, percentage changes, coefficients of variation, compound annual growth rates, and graphs have all been employed in the statistical analysis of the data. The research will be useful to policymakers as they seek to boost the efficiency of Co-operative banks. Some metrics, including as the number of branches, sum deposited, employee output, and location, proportion of late to demand, nonperforming assets, and profits, have been studied to assess the efficiency of Co-operative banks. The data reveals that PACS, in particular, are losing money owing to large overdoes, an increase in nonperforming assets (NPA), and low output per employee and location. Mutual savings banks confront a number of challenges, but they may be overcome with the right actions (such as a focus on recovery, training for employees to boost efficiency, and government backing).

Green credit operation performance evaluation of commercial banks in the context of epidemic and carbon reduction

As the world is paying increasing attention to carbon reduction, this paper uses Chinese commercial banks’ green credit and applies the DEA-Malmquist index method to construct an evaluation index system based on the panel data of the top 10 Chinese banks regarding green credit from 2015 to 2021. The results of the study show that: (1) the overall total factor productivity of the banking industry in mainland China from 2015 to 2021 is greater than 1 and shows a fluctuating upward trend except for 2015, with the mean value greater than 1 indicating a steady increase in the green credit operating efficiency of the banking industry; (2) Further analysis shows that the average value of the technical efficiency change index is greater than the average value of the technological progress index, which can be understood as the important reason for the rising operational performance of green credit business in the banking industry, and technological progress also provides a supporting role for the rising operational performance; (3) the average value of the scale efficiency change index from 2015 to 2021 is less than 1, and from 2017 onwards the value starts to be less than 1 and declining, it can be concluded that scale efficiency hinders the increase of technical efficiency index. (4) The magnitude of change in total factor productivity and the influencing factors of the 10 banks are all related to technical efficiency, indicating that the improvement of technical efficiency is the dominant factor in the improvement of green credit operational efficiency; (5) the pure technical efficiency of all 10 banks keeps increasing while the scale efficiency is decreasing, indicating that pure technical efficiency is the key factor in the improvement of banks’ technical progress index, while scale efficiency inhibits the further improvement of technical progress index. The increase in the technical progress index has been inhibited by scale efficiency.

Evaluating Banking Performance According to the European Model of Institutional Excellence: Case Study at United Bank for Investment and Finance

The aim of the research is to identify the impact of the dimensions of the European Excellence Model in evaluating the performance of the bank of the research sample, as well as to interpret which dimensions are more important to the banks of the research sample. Based on the dimensions of this model, the United Bank for Investment and Finance has chosen a research community, and has met with officials of the United Bank for Investment and Finance at various administrative levels to measure the practices of excellence management in the European model, and the analytical approach has been the case study and the construction of the checklist as a tool to collect information. The research has reached the most important results There is a discrepancy between the results of the dimensions of the European Excellence Model as it indicated after the provision of service and customer satisfaction of low value as well as after leadership either after work systems and performance. The financial came with a very high result.

A financial performance evaluation of commercial banks traded on Borsa Istanbul with a multi-dimensional perspective

Given that Turkey is an emerging market, it cannot be denied that the banks whose shares are traded on the stock exchange primarily lead the stock market and at the same time the Turkish financial markets. Therefore, a total of eleven commercial banks traded on Borsa Istanbul (BIST) have been included in the study. Since the performance of these commercial banks is evaluated in terms of multiple selected financial ratios (criteria), this study points out that it may be considered as a multi-criteria decision-making (MCDM) problem. Therefore, two effective MCDM techniques have been used in the performance evaluation process of the study. The aim of this study is to evaluate the performance of eleven commercial banks traded on BIST with a set of reasonable assessment criteria by using the integration of the criteria importance through intercriteria correlation (CRITIC) and weighted aggregated sum product assessment (WASPAS) methods for the year 2018.

Financial Performance of Islamic and Conventional Banks in Qatar: A ‎Comparative Analysis

The goal of bank performance evaluation is to guarantee that they efficiently ‎utilize resources. Financial performance analysis is a critical tool for recognizing ‎the bank's weaknesses and strengths across its numerous activities. The CAMELS ‎technique is regarded as a supervisory tool to evaluate bank performance based on ‎several aspects, according to the literature review. Regulators use on-site and off-‎site monitoring tools to assess a bank's financial stability. The CAMELS rating ‎system encourages transparency, evolution, and change in all financial ‎institutions. Furthermore, this method identifies the structural strengths and ‎weaknesses of financial organizations. This study conducts a comparative analysis ‎of Islamic and conventional banks in Qatar using the CAMELS rating scale from ‎‎2015 to 2020. We used a sample of 14 banks in Qatar, four of which were Islamic ‎while the others were conventional. The findings indicate that Islamic banks ‎showcase superior performance in Qatar while outperforming their conventional ‎counterparts in many variables. However, none of the banks in Qatar could obtain ‎a rating of 1, indicating areas of weaknesses that need to be worked on, particularly ‎in the area of liquidity, which was a critical factor for all banks. According to this ‎study, the Qatar Central Bank should improve the monitoring and screening of all ‎Islamic banks in Qatar. Furthermore, it is suggested that the Qatar central bank ‎employs the CAMELS system to track operations and field offices for banks ‎functioning to facilitate regular access to a stable banking sector. Banks can use ‎CAMELS to track their performance, and the necessary actions must be ‎undertaken.‎

Performance Evaluation of Deposit Banks with Financial Ratios: Combined Use of Objective and Subjective Criteria Weighting Methods (Combined Entropy-SWARA Based EDAS Method)

The aim of the study is to examine the performance of deposit banks in Turkey in 2020 with Multi-Criteria Decision Making (MCDM) methods. 10 criteria are determined and 17 deposit banks are analyzed. While calculating the weights of the evaluation criteria, the results of objective Entropy and subjective SWARA methods are used. Then, the calculated weights are combined with the Bayesian approach; optimal weights are obtained and used as inputs in the EDAS method. The most important criteria are identified as Net Profit (Loss) for the Period/Paid in Capital, Loans Received/Total Assets and Non-Performing Loans/Total Loans. The least important criteria are Interest Income/Total Assets, Total Revenues/Total Expenses and Interest Income/Interest Expenses. EDAS method results show that the top three most successful banks in 2020 are Garanti Bankası, İş Bankası and Akbank, respectively. Despite that, three most unsuccessful banks are Alternatif Bank, Odea Bank and Şekerbank.

Performance Evaluation of Commercial Banks during Covid-19 Pandemic: Evidences from Bangladesh

Performance Evaluation of Commercial Banks during Covid-19 Pandemic: Evidences from Bangladesh

Evaluation of the financial performance of development and investment banks with entropy-based ARAS method

ABSTRACT The current study aimed to analyse the performance of development and investment banks operating in Turkey. Between group and within-group comparisons with public, private and foreign capital according to their ownership structures were conducted. ARAS-based performance evaluation of development and investment banks in Turkey over the period of 2010–2019 indicated that Diler Investment Bank Inc. and Merrill Lynch Investment Bank Inc. were at the top three; Turkish Sınai Development Bank Inc. with Aktif Investment Bank Inc. were found in the bottom three.

Accounting for Management Practices: A Holistic Perspective in Nepalese Commercial Banks

Background: Management Accounting supports competitive decision-making by collecting, processing, and communicating information. It helps in management plan, control, and evaluation of business practices in Nepalese Commercial Banks. The main aim of this study is to analyze the management accounting system practices in Nepalese Commercial Banks. Methods: This study followed a descriptive research design. A sample of 507 bank employees has been selected with convenience sampling technique to get the information related to the accounting practices. A structured questionnaire related to the Management Accounting System including the five domains like Budgeting and Planning, Controlling and Reporting, Decision support system, Costing system and Performance Evaluation were designed in Likert scale rating format for responses, and descriptive statistics were used to make the analysis of responses. Results: It was found that the Nepalese banking sectors apply management accounting practices including budgeting and planning, controlling and reporting, decisions making, costing and performance evaluations. Among the various techniques banking sector use Budgeting and control most and costing system the least. These techniques were widely used in bank's performance evaluation as well. Conclusion: there is a positive and significant association between the application of management accounting system and organizational performance. So, the banks can enhance their performance through the use various techniques of accounting for managerial decisions.

Performance Evaluation of Chinese Commercial Banks Based on the Malmquist Index

Commercial banks have the function of promoting the raising and rational distribution of funds in economic construction in China. Commercial banks are also important in promoting the smooth development of socialist economic activities and the development of national economy and other socialist productive economic activities. At present, one of the biggest difficulties faced by China's commercial banks is the improvement of their efficiency and competitiveness in the face of continuous development and change. This paper establishes the efficiency evaluation model of commercial banks using the DEA-based Malmquist index; it also uses a data envelopment analysis (DEA) to analyze the financial data of nine listed banks in China from 2011 to 2020, studies the efficiency of commercial banks in China, and finds the efficiency differences. Based on empirical research, this paper puts forward corresponding suggestions. The research shows that the key to dealing with this situation depends on the banks’ effective utilization of scientific and technological innovation and technological progress. In order to achieve the goal of innovative and sustainable development of commercial banks, it is necessary to integrate the continuous developments of science and technology with finance.

Performance evaluation of Indian banks using feature selection data envelopment analysis: A machine learning perspective

The early signal of the potential risk of bank failure is imperative for various stakeholders such as management personnel, lenders, and shareholders. This study has developed a new feature selection‐based data envelopment analysis (DEA) model to calculate the efficiencies and predict the stress of Indian banks. The feature selection‐based data envelopment analysis (DEA) model combines feature selection methodology (a machine learning technique), with the traditional data envelopment analysis. The proposed model is able to map the DEA ranks, and the status of both failure and success of banks, and other similar decision‐making units (DMUs). It also helps in solving the problems associated with the selection of appropriate input and output features as well as the time‐dependent data points which usually have a lagged effect. The proposed model is applicable only when appropriate samples of past data of DMUs performance are available, whereby it maps both the input and output features with performance. Importantly, while dealing with the past data for selecting the appropriate inputs and outputs, it is imperative to select all the indicators that affect the performance of DMUs and thereby reduce the number of features using the machine learning approach. The proposed model is one of its kind, integrating a machine learning technique to a nonparametric frontier decision model.

A Machine Learning Approach to Evaluate the Performance of Rural Bank

In the current performance evaluation works of commercial banks, most of the researches only focus on the relationship between a single characteristic and performance and lack a comprehensive analysis of characteristics. On the other hand, they mainly focus on causal inference and lack systematic quantitative conclusions from the perspective of prediction. This paper is the first to comprehensively investigate the predictability of multidimensional features on commercial bank performance using boosting regression tree. The dimensionality in the financial-related fields is relatively high. There are not only observable price data, financial fundamentals data, etc., but also many unobservable undisclosed data and undisclosed events; more sources of income cannot be explained by existing models. Aiming at the characteristics of commercial bank data, this paper proposes an adaptively reduced step size gradient boosting regression tree algorithm for bank performance evaluation. In this method, a random subsample sampling is performed before training each regression tree. The adaptive reduction step size is used to replace the reduction step size setting of the original algorithm, which overcomes the shortcomings of low accuracy and poor generalization ability of the existing regression decision tree model. Compared to the BIRCH algorithm for classification of existing data, our proposed gradient boosting regression tree algorithm with adaptively reduced step size obtains better classification results. This paper empirically uses data from rural banks in 30 provinces in China to classify the different characteristics of rural banks’ performance in order to better evaluate their performance.

Performance Evaluation of Commercial Banks in Oman Using Ratio Analyses

Purpose of the study: The purpose of the study was to critically analyze the effectiveness of banks’ performances and to examine the associations amongst the asset management, banks’ size, operational efficiency, and their impact on the bank’s performance. Design/Methodology/Approach: The secondary data was obtained from the annual reports of five selected commercial banks of Oman listed in the Muscat Securities Market (MSM) for the period 2013 to 2019. The collected data was analyzed through financial ratios using excel and SPSS and was used to evaluate the banks’ performance. Findings: The study revealed that the Operational Efficiency (OE) of the selected commercial banks had an impact on the Return on Assets (ROA); advances of the selected commercial banks had an impact on the interest income whereas operational efficiency of the selected commercial banks had NO impact on the Interest Income. The study further confirmed that Bank Muscat proved to be the bank that performed well over the years 2013 to 2019. Research Implications: The study proved that the banks’ financial performances can be measured through the assets size, asset management, and equity management using ratio analysis which can be a good measure to adjudge the financial performances of the banks. Social Implications: The study helps the stakeholders of the banks to understand the factors and the banking activities that might help to enhance the financial performances of the banks and to take necessary action and suitable decisions accordingly. Originality/value: The study was restricted to five selected commercial banks of Oman and the study had relied mostly on quantitative techniques involving ratio analyses. The study can be extended to all the commercial banks in Oman including the most determining factor viz. customer satisfaction. Keywords: Financial Performance of Banks, Operational Efficiency, Return on Assets, Return on Equity, Interest Income, Ratio Analyses

Performance evaluation of public and private sector banks

This paper is attempt to analyse how domestic banks performed during the fiscal year (2015-2018) that go through issues affecting the sector, in general, while also explaining how the future of banking performances. The study included performances of 19 publicly listed state owned banks and SBI associate banks. In this paper performances of all the listed private sector banks have also been covered. Banks have since existence playing vital role in channelise of savings into productive purpose. As intermediaries, banks facilitating the flow of savings into investment for industrialisation of economy. But over the years the significance of banks undergone with changes in their functions like financial services. Now banks are not limited with accepting of deposits and disbursement of loans and advances.