A Hybrid Multi-Criteria Decision-Making Model for Performance Assessment in the Banking Industry

The current paper introduces a novel hybrid multi-criteria decision-making (MCDM) framework for evaluating the financial and non-financial Environmental, Social, and Governance (ESG) performance of the banking sector. To demonstrate its applicability, a real-time case study was conducted on one of the important banks in Turkey, utilizing data spanning from 2012 to 2022. The proposed framework integrates two complementary methodologies: Maximum of Criterion (MAXC) and Range of Value (ROV). MAXC was employed to objectively determine the weights of selected financial and non-financial performance indicators, while ROV facilitated the ranking of annual performance across both dimensions. The assessment follows a two-phase approach. In the first phase, MAXC was applied to assign weights to the performance indicators, revealing that the three most influential financial metrics were return on average assets, return on average equity, and the ratio of non-performing loans to total loans. Similarly, the most significant non-financial indicators were identified as community, management, and human rights. In the second phase, the ROV methodology was used to determine annual performance scores for both financial and non-financial dimensions. The findings indicate that 2022, 2012, and 2014 were the strongest years in terms of financial stability, while 2021, 2022, and 2020 ranked highest in non-financial ESG performance. Additionally, a series of sensitivity analyses was performed to evaluate the robustness and reliability of the proposed hybrid decision-making framework. The outcomes confirm that the model yields consistent, stable, and dependable results, reinforcing its applicability in performance evaluation within the banking sector.