Using convex preference cones in multiple criteria decision making and related fields

This paper reviews our own and colleagues’ research on using convex preference cones in multiple criteria decision making and related fields. The original paper by Korhonen, Wallenius, and Zionts was published in Management Science in 1984. We first present the underlying theory, concepts, and method. Then we discuss applications of the theory, particularly for finding the most preferred alternative, finding a partial and total rank ordering of alternatives, as well as developing algorithms for solving multi-objective integer and other optimization problems

Microfinance institutions and efficiency

Microfinance Institutions (MFIs) are special financial institutions. They have both a social nature and a for-profit nature. Their performance has been traditionally measured by means of financial ratios. The paper uses a Data Envelopment Analysis (DEA) approach to efficiency to show that ratio analysis does not capture DEA efficiency.Special care is taken in the specification of the DEA model. We take a methodological approach based on multivariate analysis. We rank DEA efficiencies under different models and specifications; e.g., particular sets of inputs and outputs. This serves to explore what is behind a DEA score. The results show that we can explain MFIs efficiency by means of four principal components of efficiency, and this way we are able to understand differences between DEA scores. It is shown that there are country effects on efficiency; and effects that depend on Non-governmental Organization (NGO)/non-NGO status of the MFI

A constructivist model of bank branch front-office employee evaluation: an FCM-SD-based approach

The banking sector is one of the primary drivers of economic development. This sector has been affected by various crises throughout its history – most recently, the 2008 financial and economic crisis. In response, banking institutions have had to make diverse changes to their procedures and deal with new concerns related to changes within markets. One of the main recent developments in this sector is the new commercial function assigned to bank branch front-office employees, who have become responsible for selling financial products and services, as well as recruiting and retaining clients. As a result, the sector needs new employee performance evaluation methods in line with banks and staff members’ requirements. This study combined fuzzy cognitive mapping techniques and the system dynamics (SD) approach to develop a well-informed performance analysis system for assessing bank branch front-office employees. The proposed system was validated by the Business Process Management Competence Center director at Millennium BCP – a Portuguese private banking corporation. The main difference between the model constructed in the present research and current evaluation practices is that the criteria were collected directly from multiple specialists working at different commercial banks, who deal daily with this decision problem. The model’s theoretical and practical implications are also discussed.info:eu-repo/semantics/publishedVersio

How to create indices for bank branch financial performance measurement using MCDA techniques: an illustrative example

Most banks have been negatively affected by the recent economic recession, which has forced them to evaluate their operating performance including the financial performance of bank branches. Approaches that have been applied to address the financial performance evaluation of bank branches include: optimization techniques, simulations, stochastic tools, fuzzy logics and decision support systems. Although recent improvements have been made in assessing financial performance, the potential for significant further improvement remains since the recent world economic crisis is adding pressure on business margins. The purpose of this paper is to construct an exemplificative evaluation index for bank branch financial performance by integrating cognitive maps with measuring attractiveness by a categorical based evaluation technique. We aim to apply this methodology constructively to serve as a learning mechanism and introduce transparency in the decision making process. Practical applications, strengths and weaknesses of the proposed evaluation index are also discussed

Convexity, quality and efficiency in education

While Data Envelopment Analysis has many attractions as a technique for analysing the efficiency of educational organisations, such as schools and universities, care must be taken in its use whenever its assumption of convexity of the prevailing technology and associated production possibility set may not hold. In particular, if the convexity assumption does not hold, DEA may overstate the scope for improvements in technical efficiency through proportional increases in all educational outputs and understate the importance of improvements in allocative efficiency from changing the educational output mix. The paper therefore examines conditions under which the convexity assumption is not guaranteed, particularly when the performance evaluation includes measures related to the assessed quality of the educational outputs. Under such conditions, there is a need to deploy other educational efficiency tools, including an alternative non-parametric output-orientated technique and a more explicit valuation function for educational outputs, in order to estimate the shape of the efficiency frontier and both technical and allocative efficiency

Methodological Advances in Dea

We survey the methodological advances in DEA over the last 25 years and discuss the necessary conditions for a sound empirical application. We hope this survey will contribute to the further dissemination of DEA, the knowledge of its relative strengths and weaknesses, and the tools currently available for exploiting its full potential. Our main points are illustrated by the case of the DEA study used by the regulatory office of the Dutch electricity sector (Dienst Toezicht Elektriciteitswet; Dte) for setting price caps

Adding Value to Bank Branch Performance Evaluation Using Cognitive Maps and MCDA: A Case Study

The performance evaluation of bank branches is a difficult task. One of the main reasons for this difficulty is the complexity inherent in the variety of aspects to be considered in the evaluation, and the multiple and conflicting interests of the different stakeholders involved. In this paper we aim to show how cognitive mapping and the MACBETH approach can be used to support the evaluation of bank branches through the development of multidimensional performance evaluation systems, and to deal explicitly with the trade-offs between the different dimensions of performance and interests of different stakeholders. A case study is discussed where these techniques are used in a constructive way, making the learning activity easier and introducing transparency in the decision making process. The strengths and weaknesses of the integrated use of these two operational research techniques in this context are also discussed.

Eficiencia en instituciones de microfinanzas

Microfinance Institution (MFIs) are special financial institutions. The have both a social nature and a for-profit nature. Their performance has been traditionally measured by means of financial ratios. The paper uses a Data Envelopment Analysis (DEA) approach to efficiency to show that ratio analysis does not capture DEA efficiency. Special care is taken in the specification of the DEA model. We take methodological approach based on multivariate analysis. We rank DEA efficiencies under different models and specifications: e.g. particular sets of inputs and outputs. This serves to explore what is behind a DEA score. The results show that we can explain MFIs efficiency by means of four principal components of efficiency, and this way are able to understand differences between DEA scores. It is shown that there are country effects on efficiency; and effects that depend on Non-governmental Organizations (NGO)/non-NGO status of the MF

Evaluation of the empirical performance of two-stage budgeting AIDS, QUAIDS and Rotterdam models based on weak separability

Microsimulation models for indirect taxation require detailed underlying demand systems, in order to be policy relevant. A possible solution for the econometric problem (lack of necessary degrees of freedom) is the separability concept and the closely related notion of two-stage budgeting. In this paper, weak separability is applied on the Almost Ideal Demand System (AIDS), its quadratic extension QUAIDS and the Rotterdam model. These two-stage budgeting demand systems were estimated on Belgian time series data and were evaluated by means of a comparison of their elasticities (both partial and total), goodness-of-fit measures and their forecasting accuracy. Though the rank three QUAIDS model does not dominate the others in every respect (at least for time series data), it has nice theoretical properties which can on their own be a justification for the use of the system.

Analisis prestasi bank swasta nasional

Kajian ini menganalisis prestasi bank swasta nasional dengan melihat tingkat efisiensi mengunakan Data Envelopment Analysis (DEA) dan analisis statistic untuk menemukan factor-faktor yang mempengarahi prestasi bank swasta nasional. Dari hasil analisis efisiensi bank menunjukan bank swasta nasional selama tahun 2000-2006 belum mencapai tingkat efisien baik technical efisiensi maupun cost efisiensi. Hasil pengolahan data menunjukan variable ekuiti, dummy devisa, log asset dan dummy ekuiti mempengaruhi prestasi bank swasta nasional