Proceedings of The International Conference on Research in Business, Management and Finance
Performance Evaluation of Turkish Banks with TOPSIS and Stepwise Regression
Tuğba Sarı and İhsan Erdem Kayral
This paper investigates the key criteria in the bank efficiency and performance analysis and the relative performances of 11 Turkish banks based on these pre-determined criteria over the years 2015-2017. The main purpose of this study is to introduce a robust and easy-to-calculate mathematical model for the assessment of the financial performance of banks. In the first stage of the analysis, we measure performance by employing the Technique for Order Preference by Similarity to Ideal Solution (TOPSIS) methodology. The next stage includes stepwise regression analysis in order to determine the most significant criteria for the proposed model. While there are 13 entering criteria in the initial step, the most significant criteria are selected as, Average Return on Assets; Financial Assets (Net) / Total Assets; Total Loans and Receivables / Total Assets; and Loans under Follow-up (Net) / Total Loans and Receivables. At the final stage, the performances of the banks are re-calculated based on a new robust model and the banks are ranked and compared according to their relative performances.
Keywords: bank efficiency; bank performance; stepwise regression; TOPSIS.