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Indian banks' productivity ranking via Data Envelopment Analysis and Fuzzy Multi-Attribute Decision-Making hybrid

C. Pramodh, V. Ravi and T. Nagabhushanam

International Journal of Information and Decision Sciences, 2008, vol. 1, issue 1, 44-65

Abstract: This article develops a novel measurement technique Data Envelopment Analysis (DEA)-Fuzzy Multi Attribute Decision Making Hybrid to measure the productivity levels of Indian banks and rank them. Here, the evaluation criteria (financial ratios) are treated as fuzzy sets and banks as alternatives. The relative efficiency levels output by DEA in a single-input-single-output mode are considered as membership values of the banks in six evaluation criteria. The evaluation criteria considered are: Return on Assets, Return on Equity, Equity multiplier, Profit margin, Utilization of Assets and finally Ratio of operating expenses to spread and other income. The third author, a banking domain expert, provided the weights of the criteria. Finally, the rankings obtained by the hybrid are in tune with the domain expert's expectation. A significant outcome of the study is that the size of the bank, reputation and quantity of business, did not contribute to the ranks.

Keywords: DEA; data envelopment analysis; FMADM; fuzzy multi-attribute decision making; fuzzy sets; India; banking; Indian banks; productivity ranking; financial ratios; performance evaluation. (search for similar items in EconPapers)
Date: 2008
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