Special Issue INTERNATIONAL JOURNAL OF HUMANITIES AND April 2016 CULTURAL STUDIES ISSN 2356-5926
Financial performance evaluation of banks with using non parameter
Alireza amirteymori Department of mathematics, islamic azad university, rasht branch, (main author) Asghar romozi M.a candidate of management, islamic azad university, rasht branch(thesis advisor)
Abstract
The main research question: exchange of water performance organization news in the g to be the decisions strategic upcoming they role by the and because of the importance of this research is to investigate it. The main objective of the study: the aim of this study was to exchange the water performance financial bank news with use of method of the non rparamtr (dea) in the bank farmer's state ardb of l is. The main research question: to what extent does the relative performance of agricultural banks in ardabil province can be found using the non-parametric technique of data envelopment analysis to measure. The main variables in this study to evaluate the performance of financial variables including liquidity, structure assets, profitability, adequacy capital.
Keywords: liquidity, structure assets, profitability, adequacy capital dea.
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Introduction: The company's strong financial performance and the financial institutions have resources that are critical for competitive advantage. The first of these sources of tangible assets such as property, machinery and technology, physical features that can be easily replaced in the free market, bought and sold. The second type of intangible assets, valuable, rare, are no substitute for strategic and competitive advantage and superior financial performance, are mighty.
Problem statement
Commercial banks and specialized financial institutions and funds collected dead people, traders, industrialists and other facilities granted to the applicants. In fact, his actions caused the bank to transfer resources from those who for various reasons such as: lack of expertise, lack of capital and fear of the investment risk, will not or cannot participate in economic activities to people who invest financial resources are needed, and since the purpose of providing commercial bank profits, the bank's natural resources have attracted much cheaper, and with a maximum interest rate of loans to the applicants. The primary objective of the bank as well as other profit organizations, to maximize the wealth of its owners. (Emrouznejad and f anouze, 2009)
The bank must decide whether to increase shareholder's wealth management assets and incomes lower quality or higher quality and less risk to earn assets or whether the bank should not and facilities, with investment, bandarabbas and liquidity of a long deadlines reduce his or select assets with shorter deadlines and provide a high degree of liquidity? These are questions that bank managers are always involved in them. Answers to the above questions need to be more important to evaluate the financial performance of the bank's performance in terms of profitability, the adequacy of a capital, the asset bank of the most liquid examine competing to get their chance to measure its position and act to improve and enhance its performance (Acquaah & chi, 2007) Today companies are faced with ever stronger competition and financial performance is the main goal of any institution. Every organization wants to increase its financial performance by different methods. In recent years, the competitive advantage is based competitive strategies. Companies to improve performance and deal with competitors, in order to have competitive advantages in terms of complexity, and superior performance in the markets maintain. According to the resource-based view, a better performance can be a unique resource, the integration of the resources or capacity to respond to the environment. According to this view, the difference is due to the successful performance of companies with strategic resources (physical, human and organizational) that their competitors are without those resources. Present results of the research can be used in banks are ordered transition and also to standard tdv these accounting standards that may be of this research was to look at and, if needed, for the benefit tdv this standard. In addition, universities and research centers for teaching and research, and also investment companies or agencies related to the capital market or any investor who can use the research results for decision making (Ballantine et al, 1993). Here fewes case done studies was mentioned in relation to the subject Rostami et al., (2012) conducted a study entitled evaluate the financial performance of banks listed on the stock exchange. In this study measurement of the efficiency is done by method of TOPSIS-DEA http://www.ijhcs.com/index.php/ijhcs/index Page 2718
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that actually is rational application of TOPSIS in model of data DEA.The results showed that from the perspective ideal decision-making unit, Karafarin Bank, Mellat and Parsian Bank have minimum distance and Saderat bank have maximum distance from the ideal and from the perspective of anti-ideal decision-making unit, Saderat Bank has minimum distance and Karafarin Bank has maximum distance with anti-ideal. Momeni et al., (2011), conducted a study entitled evaluate the performance of the Banks' strategy. According to the obtained results, performance resources in terms of importance were in the first rank and criteria of profitability and return on assets were in next ranks.In assessing non-financial performance, criteria pricing in terms of importance in the first rank and quality criteria services were in next ranks.The results show that by merely having good financial performance can be expected that, to improve the bank performance in general. In contrast to primarily evaluation performance has taken based on financial criteria and has been paid less attention to non-financial criteria. Smild and Matthews (2012), by multi- directional performance analysis of performance patterns in Chinese banks showed that there are what difference between performance patterns between different subgroups according to a reviewed data collection by using MEA method. Also Anjelids and Lirudy (2011), in his article entitled efficiency in the banking industry of Italy by using method of data envelopment analysis and neural networks have evaluated the performance of the 100 largest banks in Italy.
Theoretical framework of research
Method the different the evaluation performance there are, the in between they size of performance) method measurement than value total output news the value the total input the a units (the be in reach the research objectives help effective have is . It is assumed that efficient decision making unit acts always better than inefficient decisions unit. The basics theoretical analysis cover data news Performance the meaning good working is and under effect indices within organizational like profit each units, buy each unit and satisfaction by of a unit and of the such the there; the the if than output the input expression the are: Input / output = performance
Methods parametric and nonparametric size making performance Techniques the calculation the performance and amount appropriate increase in output and reduction in and rudy the order reach the cent efficiency in hundred in years recent create by have the generally the two category techniques parametric and techniques nonparametric share there. In methods parametric figure certain the the a function production in comment the are the by methods statistical and economy poll estimate coefficients unknown function (parameters) are pay de. Because in the method c parameters (coefficients) of the function estimate the be the the method parametric the say. In methods nonparametric no form functional the function production in comment the not be and function production by its units specified a invertebrates. (Mehregan, 2004).
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Figure 1-1) parametric and non-parametric methods of data envelopment analysis (cook, 2001)
Method analysis cover data is of the ways assessment performance with use of measurement performance the units here. In the method units decision receiver about evaluation units the independent have the inputs similar the production output the related the business the brand. Necessary conformance inputs and outputs provided first in select units about assessment rss tes. Analysis cover data news of including methods non- parametric assessment performance. The summary the analysis cover data news in two templates total models bcc and ccr raised the show de. These two model with benchmark embed relationship the following the by farrell the size making performance recommend it was, figure have (farrell, 1997) In 1984 Banker, Charnz and koper by a change in the model of ccr new model presented that according to the first letter of their names became known to model of bcc.Bcc model is a model that evaluates the relative efficiency of units with variable return to scale.
Goals of profit
First of all applicable goals must be well defined for a financial manager to certain tasks for achieving the goals of pre follow. A properly defined and understood may be the key to determining the proper path for the future success of the company and because the profit profit organizations, and commercial firms to determine the goals usually the discussed goal further maximum is the profit maximizing wealth. (Komonen, 2002)
2.2.1. Maximizing profits
The company's goal is to try to gain more profit focused Hendrickson
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As a criterion for evaluating the effectiveness of the benefits mentioned, and believes that the efficient operation of a business unit on the payment of dividends to the shareholders' influence. Shareholders to buy the shares before attempting to evaluate the effectiveness of the company's management. One of the best examples of performance management, efficient use of available resources is now finally makes its return on equity and profit as an indicator of management efficiency evaluation are discussed. Terms efficient utilization of available resources in the entity's operations that resulted in a profit is concerned. Broad interpretation of economic efficiency, the correct combination of factors of production, namely labor, land, capital and management will connect. (Claver etal, 2002)
2.2.2. Maximizing wealth
Maximizing wealth manager which has as its aim, the present value of the company's stock market as a source of increasing wealth does not matter, because it correctly found that profitability is primarily a long-term perspective should be taken into consideration the however, adopting the goal of creating between the maximization of wealth and its related objectives like sustainable growth, avoiding risk and market price of the company.
The importance and necessity of evaluating the performance Each organization in order to knowledge of the utility and quality activities its especially the environment the complex and dynamic, the need urgent the system evaluation performance there. Absence system performance evaluation in a organization the meaning failure subscription relationship environment within and brown organization considered be the outcome it aging and in finally death organization is (Karj alainen, 2007) Measure the performance of the basic elements of planning, control and decision-making is effective. In fact, measurement systems, an important role to monitor, increase motivation, improve communications and avoid confusion in the play. As a result, these systems effectively help managers to review and improve current business processes and goals are. (Lee, 2002) to measure the performance of the feedback information required to reveal improvements, incentives for progress and identify problems in the system and to provide decision-makers and organizations. (Rietveld & schipper, 1995). Continuous improvement of organizations performance, creates synergic great force that these forces can Create a backup plan development and create opportunities for organizational excellence. No reviews and gain awareness of the progress and achievement of objectives and identify the challenges facing the organization and gain feedback and information on the implementation of policies formulated and identify areas that need serious improvement, continuous improvement of performance will not be possible. All of the above is not possible without measuring. English physicist lord kelvin said the measure is necessary: "if what we're talking about is measured and expressed in terms of numbers, we can claim what we're about the issue of our knowledge, otherwise incomplete never to reach maturity. Scientific management is also indicative of the content. We can not control what you can measure and manage what you can not control it, it will not be possible. The central theme in organizational analysis, performance measurement and improvement is required and hence an organization's performance appraisal system imaginable. Well as scholars and researchers believe that the
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evaluation function is a major issue at all organizational analysis and imagine an organization that has evaluated the performance measure may not be a problem. Evaluation and measurement of the performance leads to creating intelligent system and motivate people to behave appropriately and an essential part of organizational policy formulation and implementation.
Existing approaches on performance criteria: Numerous studies have long been a benchmark for evaluating the performance of companies and executives in order to ensure the company to align the basis for the decisions of the economic interests of potential investors creditors the has been done on potential investors. Results obtained from these studies to provide four approaches taken in conjunction with the performance criteria as follows:
Figure 1-2: performance evaluation approaches 1. Accounting approach: The objective function is always linked to value a company's profits if managers can increase performance would be desirable to have reached your goal, but you should see the amount of the increase how much is desirable to have and to look. In this approach, the figures contained in financial statements, including profit, earnings per share, operating cash flows, return on assets and return on equity will be used to assess performance. . (Mette and Kent, 2012)
Approach to financial management: This approach is based on knowledge management, and argues that we can use the ideas and techniques discussed in the management of the business units assessed. Among these models, they can be pricing, noting that the types of assets such as securities, land, furniture, building the value as well as the investment of the efficiency of set a. One of the models for valuation of financial management financial assets pricing model (capm) is. By comparing the return on investment (which is obtained according to the above model) the expected rate of return investors can evaluate the performance of business units. It also compares the expected rate of return and the rate of return required by investors to evaluate the performance of future managers. Under this approach, if the rate of return realized by shareholders expected rate of return is higher, it can be said that performance management is desirable if the rate of return realized by shareholders, the less is the expected rate of return can be assumed that the is not good executives. Consistent with this approach, most of the theories of financial management, capital asset pricing model (capm) and the concepts of risk and return is used. Ttakyd of this approach is to determine the excess returns per share. (Mette and Kent, 2012)
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3. Economic approach: Based on this approach in which economic concepts are used, the performance of the business unit with a focus on the profitability of the assets of the company and according to the rate of return and cost of capital is used for economic evaluate. Added-value economical, added-value moderated economical and the market value of the group is located. (Mostafa, 2009) 4. Integrated approach: In this approach, a combination of accounting and market data used to evaluate the performance such as tobin's q ratio and price to earnings ( p / e ). (Hirofumi and roman, 2011) 2-8. Financial performance evaluation criteria Users reports financial with use of criteria different performance company evaluate more . Methods several the evaluation performance there there the in general it be them the two category models accounting and models economic divided the . (Graham and frankenberger, 2000).
2-8-1. Accounting performance criteria Accounting measures of performance evaluation on the income statement and balance sheet stress, which means that a cash outflow will be a cost in the income statement and the balance sheet as a capital income statement reflect the result of which rae and loss and balance sheet arising from the use of different methods are different.
Ratio of return of equity, return on assets and earnings per share, are among accounting performance criteria that each of them is discussed in continue: Measures of economic performance In response to criticisms of accounting performance measures, measures of economic performance emerged. The following are some of the most important criteria, such as economic value added, market value added and residual income refers to Theories and models. The first times charnz, cooper and rhodes in 1978 to measurement efficiency of method analysis of the suppose return fixed than the scale use were the the model , (dea) cover data celebrities it is., which the the often in long-term event it falls; ie time the ccr all firms in the optimization action altogether., but in world the actual about we the reason incomplete competition; terms state constraints financial and etc. Access the scale optimization to so impossible them.'s the same reason bunker, charnz and cooper model analysis cover data the with assuming returns variable than the scale presentation were the constraints model previous ie suppose celebrity returns there. Models the estimate efficiency component branches as follows: the in θ is the efficiency branch , λ i weight set reference the branches inefficient and x, y matrix outputs and input the branch yi, xi matrix outputs and input branches and is
The in where ai, bi of low and top weight the relative institutions and ar, br indicates the about low and top weight the relative outputs is According to formula idmu efficiency can be defined as follows:
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Formula 3-4 Here ur and vi weighting factors assigned to i r th-th output and input. Clearly idmu should able the gain the relative performance may there. Thus model program in the following deficit follows collect i have this indicator.
Formula 4-4 With use of conversion of l cooper and charnz model program in the following deficit top can of via the model program in the following the bottom line of the solving there.
Formula 5-4 Suppose optimal performance is idmu since it is likely that the lp model answer for the nine multiple have there. Than model program in the following deficit follows use is based to best efficiency the relative efficiency relative dmu0 under conditions that may be set idmu remain unchanged.
Formula 6-4 Here dmuj0 under evaluation and the relative performance may be idmu. 6 linear programming problem is solved by the following linear programming model:
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Formula 7-4 The admu performance is defined as follows:
Formula 8-4 Clearly, the performance of admu is worse than any other dmu linear programming can be achieved:
Formula 9.4 Suppose worst performance admu is the model program in the following line of follows the may be to determine the worst relative performance may dmu0 under circumstances that remain unchanged are the worst relative performance may admu astfadh located.
Formula 10-4 Now we can say is dmu0 efficient if and only if otherwise it will call ghyrkara. On the other hand, we can say that dmu0 is inefficient if and only if otherwise it will call ghyrnakara. After this, the rc index to calculate the overall efficiency is defined as follows:
Model output for ardabil branch:
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As it can be seen that the objective function value is 0.26 times the amount of ardabil branch 7 models based software is Model output for bigelow blue branch:
As can be seen, with the first branch of the bigelow water in the objective function and its output is based on the model 7. (due to the 48 model should be written to the output image, and all of them should be 48 according to the two samples were from the perspective of the output of the image is the final results of the objective functions table refrain given 1-4) Output the software is as follows: Model output for ardabil branch: Sources and mach viii Table 1.4. The final results of medals and RCA index
Name of Ardabil Province RC branches of the Keshavarzi
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Bank Ardabil 0.26 2.875 0.717017
Abi Bigelow 1 7.75 1.148148
Araz 0.99 3 1.492537
Araloo 0.7 8.625 1.088328
Areta 0.88 3 1.415094
Aslandoz 0.5 5 1.111111
Oltan Parsabad 0.61 3 1.25523
Goldsmiths market. 0.78 6 1.149425
Meshkinshar Market 0.84 2 1.724138
Bilesuar 0.94 3.5 1.367188
Pars Abad 0.77 8.875 1.095003
Tazeh kond Angot 0.92 2.125 1.763485
Ardabil Vegetables 0.96 3 1.470588
Jafarabad of Moghan 1 4.08 1.324675
Hafez of Ardabil 0.74 3 1.327434
Street of Basij Bilesuar 0.86 3 1.401869
West Kashani Street 0.86 9 1.105651
Anklet 3.4 5.25 2.837838
Khujin of Ardabil 1 5.375 1.228571
Imam Khomeini Avenue of PARSABAD 0.61 7.5 1.088534
Street of Beast of Ardabil 0.58 3 1.239669
Street Pir Abdolmalek 0.92 3 1.442308
Danesh of Ardabil 0.48 1.5 1.470588
Razi 0.43 3 1.167315
Cooperative Organization in 0.75 4.625 1.193548
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Ardebil
Cooperative Organization in Meshkinshar 0.78 9 1.094891
Agriculture Organization of Ardabil 0.89 3 1.421801
Sabalan Ardabil 0.81 3 1.369863
Sareyn 0.515 2.125 1.319876
Shahid Beheshti of PARSABAD 0.72 3 1.315789
Sheikh Safi 0.8 2 1.666667
Anbaran od Ardabil 0.62 7.375 1.091784
FAKHRABAD 0.65 2 1.481481
Ghareaghaj 0.7 3 1.304348
Kolur 1 2.95 1.512821
Kuraim 0.39 1 1.639344
Warmth 0.81 3 1.369863
Givi 0.56 5.25 1.119403
Management of Ardabil 1 1.2 6
Moradlu 0.65 2.54 1.343915
Meshkinshar 0.76 7.75 1.108727
Namin 0.83 6.625 1.143227
Nir 0.98 2 1.960784
Islamic Unity (fighters) 0.62 2.62 1.31
Hashtjin 0.7 1 3.333333
Hire 0.68 3.5 1.241135
IDMU 8.31 12.375 3.04428
ADMU 0.81 0.95 6.785714
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