Naslov
Profitability as a business goal: the multicriteria approach to the ranking of the five largest Croatian banks

Autori
Vojvodić Rosenzweig, Višnja ; Volarević, Hrvoje ; Varović, Mario

Izvornik
Business systems research (1847-8344) 3 (2012), 1; 37-48

Vrsta, podvrsta i kategorija rada
Radovi u časopisima, članak, znanstveni

Ključne riječi
Commercial banks ; bank ranking ; profitability ; multicriteria modelling ; goal programming

Sažetak
The ranking of commercial banks is usually based on using a single criterion, size of assets or income. A multicriteria approach allows a more complex analysis of their business efficiency. This paper proposes the ranking of banks based on six financial criteria using a multicriteria approach implementing a goal programming model. The criteria are classified into three basic groups: Profitability, credit risk and solvency. Business performance will be evaluated using a score for every bank, calculated as the weighted sum of relative values of individual indicators. Solving the corresponding goal programming problem, the weights are calculated. It is assumed that the goal of each bank is highest profitability. Because of market competition between banks, the weights of indicators depend on the performance of every bank. This method is applied for five biggest Croatian banks (ZABA, PBZ, ERSTE, RBA and HYPO). For the observed period (2010), the highest priority is given to profitability and then to credit risk. The ranking is achieved by using a multicriteria model. The research was conducted for one business year and it would be necessary to make an analysis for a longer time period and to include other financial indicators used in the banking sector.

Izvorni jezik
Engleski

Znanstvena područja
Matematika, Ekonomija, Interdisciplinarne društvene znanosti

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