A Multiple Criteria Framework to Evaluate Bank Branch Potential Attractiveness

Abstract

remarkable progress has occurred over the years in the performance evaluation of bank branches. Even though financial measures are usually considered the most important in assessing branch viability, we posit that insufficient attention has been given to other factors that affect the branches' potential profitability and attractiveness, such as: location features, trade area characteristics and facilities management. Based on the integrated use of cognitive maps and multiple criteria decision analysis, we propose a framework that adds value to the way that potential attractiveness criteria to assess bank branches are selected and to the way that the trade-offs among those criteria are obtained. this framework is the result of a process involving several directors from the five largest banks operating in Portugal, and follows a constructivist approach. Our findings suggest that the use of cognitive maps systematically identifies previously omitted criteria that may assess potential attractiveness. the use of multiple criteria techniques clarify and add transparency to the way trade-offs are dealt with. advantages and disadvantages of the proposed framework are also discussed.

A Fuzzy Knowledge-Based Framework for Risk Assessment of Residential Real Estate Investments

“…Many major decisions in organizations are made on a collective basis (Ferreira et al 2012). In this sense, and because the facilitator (i.e.…”

“…In practice, according to Carlucci et al (2013: 216), "through a proper neural network computational model, [.. Figure 3 has a degree of centrality; and, because the development of an FCM allowed for the calculation of these degrees, it fostered an understanding of how the determinants of investment risk relate to each other, providing a knowledge base that can inform, for instance, the integrated application of an appraisal method or of a multiple criteria decision analysis (MCDA) technique to select the best investment alternative (for discussion and/or further details on the integrated use of these methodologies, see Zavadskas, Turskis 2011;Ferreira et al 2012;Zavadskas et al 2014).…”

“…linear discriminant analysis, linear regression, logit, probit, tobit and binary tree) "are reported to have a lack of accuracy [in this field]". In addition, the current approaches for residential real estate risk evaluation are usually limited by: (1) lack of necessary data (Lopez, Saidenberg 2000); (2) lack of rationality in the way trade-offs between criteria are calculated (Ferreira et al 2012); and (3) the need to make subjectivity explicit in the decision making process (Santos et al 2002) (for further discussion, see also Wang et al 2011).…”

“…Cognitive maps become useful in decision making processes, because they can help identify opportunities of action, reduce errors and search for good solutions (cf. Ferreira et al 2012). In practice, these maps are tools for structuring complex problems; and as such, they contribute to reduce the rate of omitted criteria, promote discussion, and lead to increased learning among the actors involved in the decision making framework, as a result of the exchange of ideas and experiences (cf.…”

“…In addition, the arrows can have positive (+) or negative (-) signs, depending on the type of cause-andeffect relationship between the existing concepts (cf. Montibeller, Belton 2006;Ferreira et al 2012). In short, cognitive maps are presented as representations of the environment; provide a snapshot of reality and allow the understanding of cause-and-effect relationships between concepts or variables to be clarified.…”