Comparison of Financial Performances of Banks by Multi Criteria Decision Making Methods: The Case of Turkey

Abstract

The share of participation banking in the finance sector has been growing in recent years. This growth indicates that participation banking will be an important competitor for traditional banking in the banking system. In this context, the financial performances of traditional banking and participation banking are compared in this study. While measuring, primarily the data obtained from banks' financial statements were used. These data, consisting of 15 financial ratios in 5 different categories, have been obtained from banks’ financial statements and income statements. In this study, the financial performance of 18 traditional banks and 3 participation banks operating in Turkey between 2010 and 2018 were analyzed with multivariate decision-making methods. The Technique for Order Preference by Similarity to Ideal Solution (TOPSIS) method was used to measure the financial performance. As a result of the analysis, it was determined which banks showed better financial performance and the results were commented.