Investigating the Effective Factors on the Performance of Banks Listed on the Tehran Stock Exchange with the Combined Approach of DEMATEL-ANP

Document Type : Research Paper

Authors

1 Ph.D. Student of Economic, Mofid University, Qom, Iran.

2 Associate Professor of Industrial Engineering, Urmia University of Technology, Urmia, Iran.

10.22103/jdc.2022.19206.1218

Abstract

Objective: To study the main and sub-influential factors affecting the performance of banks in order to form the financial stability of the national economy and on the other hand in improving the optimal management of the banking system is of great importance. In the studies and evaluations of IMF economists, it is generally believed that the factors affecting the optimal performance of the banking system in the long run have profound effects on the economies of countries, on the other hand, banks play an important role in achieving macroeconomic goals. And their proper and optimal performance, which act as the economic stimulus of the country, has a significant role in advancing the macroeconomic goals of countries and is considered one of the important indicators of economic growth that failure to pay attention to this issue can lead to disruption. The balance of domestic and foreign accounts of the country and affect the performance of banks, in this regard, the banks themselves face a variety of risks that the study of these factors is also a priority. In a way that forces them to react and be sensitive and take the necessary measures to improve their performance and exposes the use of solutions recommended by international economic organizations and indicators of related economic models. The purpose of this study was to investigate the financial performance of banks by identifying the effective indicators and their interaction and evaluating the effectiveness and mutual influence of the main and sub-criteria affecting the financial performance of banks operating in the stock market. Sensitivity to market risk) and their sub-criteria with emphasis on the devaluation of the national currency through the exchange rate position during the years 2015-2020.
Method: Today, with the complexity of important economic issues and the importance of speed in reaching the answer, in addition to classical methods, new techniques that have grown significantly in recent years, to solve many of these issues by optimizing methods to solve many Unknowns are provided. Based on the research background and factors of Kamels model, the main indicators and sub-criteria affecting the financial performance of 18 banks active in Tehran Stock Exchange were identified and in this regard, six main indicators and twenty-three sub-criteria affecting the performance of the banking system were identified. In the next step, twenty-three sub-criteria in terms of weight importance are compared with the degree of interaction and their relative importance, and their prioritization is measured based on the relative importance of the factors and because factors and variables are not independent of each other. On the one hand, the combined multi-criteria decision-making techniques used by DEMATEL and ANP are known as DANP, which is a well-known tool used in recent years to address various MCDM issues such as performance appraisal and selection of management strategies. Has gone and also cause and effect relationships between factors have been investigated. Then, with the combined decision-making methods of Demetel multi-criteria and neural network process, interactive communications and their weighting coefficients are determined.
Results and Conclusion: Among the results are the priority of 6 main factors including capital adequacy, asset management, management ability, income, liquidity management and risk sensitivity and 23 sub-factors of bank size criteria, total facilities, total assets, lending facilities and receivables. From non-governmental entities, total income, inactive assets, other deposits, participation bonds, cash and operating profit and loss with weight coefficients were of great importance. However, in terms of comparing interaction and relative importance coefficient, the main index of sensitivity to risk was in the first place, but it was much less important. Among the sub-criteria, national monetary value, operating expenses, liquidity risk and bank size were more interactive but less important. Therefore, it is very important to prioritize these important influential factors in the strategic plans and executive actions of banks. From the results of internal communication, it was found that the six main indicators in terms of weight importance are the priority of capital adequacy, asset management, management ability, total income, liquidity management and risk sensitivity, respectively, while in comparison with the degree of interaction and importance. Their relative influences include risk sensitivity, asset management, capital adequacy, management ability, total revenue, and liquidity management, respectively. Comparing the results, it was found that the weight of the risk sensitivity index in the banking system is significantly different from the relative importance of it. And increase banking risks, which will have a negative impact on the performance of banks, and in this case, the implementation of monetary policies with market operations to improve the performance and increase the volume of deposits in the banking sector will be provided.

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References

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History

  • Receive Date: 19 March 2022
  • Revise Date: 19 May 2022
  • Accept Date: 14 June 2022

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