Ranking of banks in Serbia

Abstract

It is often very difficult to rank entities characterized by more than one indicator. In the case of banking sector, especially in transition countries, it would be important to determine the relationship among the banks, regarding their efficiency and relevant characteristics. The results obtained in two different ranking processes are presented, discussed and compared in this paper. The first procedure is based on Data Envelopment Analysis, mathematical programming technique that can be applied to assessing the efficiency of a variety of entities, using variety of data. The second procedure is based on I-distance, a multivariate statistical method for ranking entities. Both methods allow the use of several criteria, and they both give one single index which can be considered as a rank. The complementary use of the two methods provides more realistic picture of the tendencies in the banking sector and the combination of the results obtained in two processes provides a useful background for more comprehensive evaluation of the banks efficiency.