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 r...

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Bibliographic Details
Published inMathematics (Basel) Vol. 11; no. 14; p. 3257
Main Authors Opreana, Alin, Vinerean, Simona, Mihaiu, Diana Marieta, Barbu, Liliana, Șerban, Radu-Alexandru
Format Journal Article
LanguageEnglish
Published Basel MDPI AG 01.07.2023
Subjects
bank performance
Banking industry
Banks
Banks (Finance)
Computer industry
country risk
Data analysis
Decision analysis
Decision making
Discriminant analysis
Economic analysis
Financial institutions
Fuzzy sets
fuzzy-ANP
GDP
Globalization
Gross Domestic Product
Information services
Macroeconomics
Mathematical analysis
Mathematics
Neural networks
Online information services
Online services
Performance evaluation
Political risk
principal component analysis
Principal components analysis
Research methodology
Risk assessment
Risk factors
Canada
Romania
France
United States
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Summary: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.
ISSN:2227-7390
2227-7390
DOI:10.3390/math11143257