A Multiple Criteria Decision Making Approach to Evaluate the Financial Performance of Scheduled Commercial Banks in India

Abstract

In a liberalizing economy, the banking and financial sector assume top priority. newlineGlobalization requires adhering to standards and yardsticks that are universally applicable. Although, newlineprospects for the Indian banking industry remain optimistic, it is being affected by the dynamic and newlinehighly competitive global banking environment. Hence, the financial performance of the Scheduled newlineCommercial Banks in India was assessed with a view to explore the financial soundness of the banks newlineusing the multiple criteria decision - making approach (TOPSIS). A total of 40 Scheduled Commercial newlineBanks were selected on the basis of the advances provided, amounting to a minimum of Rs.1,500 newlinebillions as on 31-03-2014. The study covered a period of 16 years from 1999-2000 to 2014-2015. The newlinedata was collected from the secondary sources and an expert opinion was obtained to assign the newlineweights to the ratios. The findings of the study indicated that the banks that effectively reduce their newlinerisks garners more profit and upholds consistency in their business. newlinei) Major objectives : newlinei) To assess the financial performance of select Scheduled Commercial Banks in India, newlineii) To identify the determinants of profitability of the Scheduled Commercial Banks in India, newlineiii) To rank the banks on the basis of the multiple criteria decision making approach, and newlineiv) To find the consistency in the performance of the banks over the years. newlineii) Hypothesis: newlineHypotheses H01 to H05 were framed to find if there was any difference in the financial newlineperformance of the Scheduled Commercial Banks before 1999-2000 to 2006-2007 and after newline2008-2009 to 2014-2015 to know the effect of global financial crisis. newlineH01: There is no difference in the capital adequacy of select Scheduled Commercial Banks newlinebefore and after crisis. newlineH02: There is no difference in the asset quality of select Scheduled Commercial Banks newlinebefore and after crisis. newlineH03: There is no difference in the management ability of select Scheduled Commercial newlineBanks before and after crisis. newlineH04: There is no difference in the ea