Financial aspects of the Moldavian banking system: an application of the multicriteria PROMETHEE and DEA methods in banking analysis
2010
Camerzan, A.
Purpose - the purpose of this research is to examine the efficiency and performance of Moldavian commercial banks for the period 2003-2008. Therefore, the objectives of this study are to rank the commercial banks in Moldova, assuming their financial characteristics as a guideline for future development, and to assess their financial performance. Design/ methodology/ approach - The multi-criteria PROMETHEE method has been proposed as a method for evaluating banking performance over multiple attributes, being applied for each year and in the average values of the most important financial ratios over the period 2003-2008. Furthermore, this study utilizes the DEA window analysis methodology, which allows us distinguish among three types of efficiency, namely, technical, pure technical and scale efficiencies. Findings - During the period of study, the results suggest that that the Moldavian banking groups have exhibited the overall or technical efficiency of 91.80 per cent for Model 1 and 93.50 per cent for Model 2. Moreover, the PROMETHEE results indicate that there were no drastic changes in the positions of the top and last ranking banks, which means that they are stable. Research limitations/implications - The study could be extended to examine the impact of including of Less Loan Loss Provisions in the DEA model 1. Originality/value - This study provides new empirical evidence on the efficiency and performance of Moldavian commercial banks.
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