Drharshpurohi Mansi Mathur

1)
2)
3)

Rating of Private Sector Banks using Analytic Hierarchy Process
Dr. Harsh Purohit
Associate professor,
Banasthali University, Rajasthan
ABSTRACT
There are many bank stakeholders, from the government to ordinary people. Each of them is interested in specific
bank business segment and each of them requires specific information on bank business. There are many situations
where the most suitable bank h
HDFC Bank & Axis Bank have been undertaken for the study ,to rate which is the best bank on the basis of
Quantitative factors like Profit , Capital Adequacy , Liquidity & Mana
Qualitative factor like Corporate Governance. The data for Quantitative as well as qualitative factors have been
collected for the period (2000
the model The rating of banks is done using Analytic Hierarchy Process
criteria decision
By applying the AHP model method
capital Adequacy criteria over other criterias.
achieved the highest rating, followed by Axis Bank & then HDFC Ban
Keywords
INTRODUCTION
The Analytic Hierarchy Process that will be used for Banks rating is one of the most widely exploited decision
making methods in cases when the
results of the study will be useful for
has been applied in this study using Microsoft Excel
The specific objectives of this paper are:
1) To identify the
2) To present a developed hierarchy structure of the AHP model for the rating of banks using qualitative & quantitative
criterias.
3) To analyze the results
State of Art
The application of the AHP has received considerable attention in the recent literature.
Tihomir Hunjak, Nina Begi
us
using Microsoft Office Excel
tool for deciding which bank is better in respect to
Khwanruthai Bunruamkaew
steps to be followed. It was analyzed by the authors that
consistency & if th
Hunjak,
model is based on the AHP method (Analytical Hierarchy Process), and it enables the integration of the
quantitative and qualitative data.
Javalgi, Armacost and Hosseini
management and analysis of consumer bank selection decisions. The suitability of the AHP in examining
bank selection by consumers for managerial decision making is demonstrated using an empirical analysis in
a major metropolitan area.
The AHP is a multiple criteria decision
related to the decision
development, priority and ranking. It is observed that the AHP is being predominantly used in the theme
area of selection and evaluation. As far as the area of application is concerned, most of the times the AHP
has been used

l8C'S ln1L8nA1lCnAL
lSSn
vCLuML:2,lSSuL:1
!AnuA8?
www.|rc[ourna|s.org
Dr. Harsh Purohit
Associate professor,
ABSTRACT
where the most suitable bank h
collected for the period (2000
criteria decision-making.AHP Model has been applied in the study using Microsoft Excel.
By applying the AHP model method
Keywords: Analytic Hierarchy Process, Banks, Banks rating, Qualitative & Quantitative factors.
INTRODUCTION
making methods in cases when the
results of the study will be useful for
To identify the objectives (criteria and sub criteria) relevant for the rating
To present a developed hierarchy structure of the AHP model for the rating of banks using qualitative & quantitative

To analyze the results.
State of Art
using developed AHP model.
using Microsoft Office Excel
consistency & if th
Hunjak, Drago Jakov
a major metropolitan area.
related to the decision
has been used in engineering, personal and social categories.
l8C'S ln1L8nA1lCnAL
lSSn:2320-8236
vCLuML:2,lSSuL:1
!AnuA8?-MA8CP2014
www.|rc[ourna|s.org
where the most suitable bank has to be chosen.
collected for the period (2000-10) but an average figure of each factor have been considered f
making.AHP Model has been applied in the study using Microsoft Excel.
By applying the AHP model methodology, It has been found that Researchers have given highest preference to
Analytic Hierarchy Process, Banks, Banks rating, Qualitative & Quantitative factors.

making methods in cases when the decision is based on Qualitative & Quantitative criterias and sub
results of the study will be useful for bank's clients, partners, and investors or other interested parties.
objectives (criteria and sub criteria) relevant for the rating
ing developed AHP model.
using Microsoft Office Excel.
consistency & if the consistency ratio is more than 0.10 then we can revise pair wise comparisons.
Drago Jakovevi
a major metropolitan area. Vaidya and Kumar
related to the decision-making: selection, evaluation, benefit
in engineering, personal and social categories.
l8C'S ln1L8nA1lCnAL !Cu8nAL Cl MuL1lulSC

MA8CP2014
www.|rc[ourna|s.org
as to be chosen. Three Leading private sector banks of India namely ICICI Bank ,
10) but an average figure of each factor have been considered f
ology, It has been found that Researchers have given highest preference to
capital Adequacy criteria over other criterias. After compiling all the criterias it is observed that ICICI bank
decision is based on Qualitative & Quantitative criterias and sub
bank's clients, partners, and investors or other interested parties.
has been applied in this study using Microsoft Excel.
Tihomir Hunjak, Nina Begievi presents comparison of financial ratios of 15 large banks of Croatia
ing developed AHP model. The application for comparing bank's financial ratios has been developed
It was observed that AHP model for prioritizing banks that can be used as a
Khwanruthai Bunruamkaew describes how AHP analysis can be done in Excel & explained various
e consistency ratio is more than 0.10 then we can revise pair wise comparisons.
presents a multicriteria
Javalgi, Armacost and Hosseini described how to use the Analytic Hiera
Vaidya and Kumar
The AHP is a multiple criteria decision-making method that has been used in almost all the applications
making: selection, evaluation, benefit
!Cu8nAL Cl MuL1lulSClLlnA8? 8LSLA8CP ln

Three Leading private sector banks of India namely ICICI Bank ,
After compiling all the criterias it is observed that ICICI bank

presents comparison of financial ratios of 15 large banks of Croatia
The application for comparing bank's financial ratios has been developed
describes how AHP analysis can be done in Excel & explained various
a multicriteria model for the bank performance evaluation. The
described how to use the Analytic Hiera
Vaidya and Kumar present a literature review of the applications of the AHP.
making method that has been used in almost all the applications
making: selection, evaluation, benefit
lLlnA8? 8LSLA8CP ln

Quantitative factors like Profit , Capital Adequacy , Liquidity & Management ,which are based on financial ratios &
the model The rating of banks is done using Analytic Hierarchy Process. It is a mathematical technique for multi
achieved the highest rating, followed by Axis Bank & then HDFC Bank.
objectives (criteria and sub criteria) relevant for the rating of banks.
the criteria/sub criteria given in the model.
steps to be followed. It was analyzed by the authors that With AHP, we can measure the degree of
model for the bank performance evaluation. The
described how to use the Analytic Hiera
present a literature review of the applications of the AHP.
making: selection, evaluation, benefitcost analys
lLlnA8? 8LSLA8CP ln SCClAL & MAnACLMLn1

Anand College of Education, Agra.
gement ,which are based on financial ratios &
is a mathematical technique for multi
of banks.
With AHP, we can measure the degree of
described how to use the Analytic Hierarchy Process for bank
cost analysis, allocations, planning and
SCClAL & MAnACLMLn1 SClLnCLS

Mrs. Mansi Mathur
Lecturer,
College of Education, Agra.
10) but an average figure of each factor have been considered for the application of
is a mathematical technique for multi
decision is based on Qualitative & Quantitative criterias and sub-criterias. The
bank's clients, partners, and investors or other interested parties. AHP Model
The application of the AHP has received considerable attention in the recent literature. Dejan ehuli
e consistency ratio is more than 0.10 then we can revise pair wise comparisons. Tihomir
rchy Process for bank
is, allocations, planning and
SClLnCLS


Mrs. Mansi Mathur,
Lecturer,
College of Education, Agra.
or the application of
is a mathematical technique for multi-
criterias. The
AHP Model
ehuli,
Tihomir
rchy Process for bank
is, allocations, planning and

Research Problem
There is a huge interest in bank business and there are many bank stakeholders, from the government to ordinary
people. Each of them is interested i
on bank business. There are many situations where the most suitable bank has to be chosen. The most important
source of information is annual reports of the banks. Annual repor
synthesized picture of all business processes of a bank during the period of one year. Information can be even more
exploitable through financial ratios. Financial ratios are the product of Annual reports and
data presented in Annual reports. Financial ratios are widely used to analyses a bank's performance. Also the Annual
report contains the corporate governance report, which has been used in the study for banks ratings.
Within this study, the AHP is used to develop and validate a model for rating of banks. Furthermore, a Excel
application through the proposed AHP model is developed. Researchers express their preferences based on the
qualitative and quantitative criteria and t
priorities of the alternatives) can greatly contribute to the higher quality of stakeholders decisions.
The Analytic Hierarchy Process
The Analytic Hierarchy Process (AHP) is a powerfu
setting priorities and making the best decision when both qualitative and quantitative aspects of a decision need to
be considered. The AHP is one of the most widely exploited decision making met
(the selection of given alternatives and their prioritizing) is based on several criteria (Sub
decision problem solving, which this method uses, is based on the problem decomposition into a hierarchy struc
which consists of the goal, the criteria, the sub criteria and the alternatives.
The method application can be explained in four steps:
1)The hierarchy model of the decision problem is developed in such a way that the goal is positioned at the top, w
criteria and sub criteria on lower levels and finally alternatives at the bottom of the model.
2) On each hierarchy structure level, the pair
the elements of this level, starting with
3) On the basis of the pair
calculated. Numbers of numerical calculations are made to get weight for
are allowed to change preferences and to test the results if the Inconsistency level is high.
4) The results are priorities of the alternatives in the form of a priority list of alternatives .
Research Methodology
The study has undertaken three major private sector banks of India namely ICICI , HDFC & AXIS Bank for the
purpose of rating . Five criterias have been undertaken for rating .
factors have been collected f
the application of the model
The goal of the study is to rate the banks & on the basis of results find the best bank
quantitative criterias. Four quantitative criterias namely Profitability, Capi
Liquidity & one qualitative criteria namely Corporate Governance have been have taken for hierarchy model. The
quantitative criteria are based on sub
Profitability Criteria is based on
Ratios).Management Criteria depends on two sub
(Financial ratios) & Liquidity is based on two sub
(Financial ratios) . Researchers have based Capital Adequacy on Capital Adequacy ratio. There are no sub
criterias for Corporate Governance.
On the bottom level of the hierarchy are the alternatives i.e. three banks na
Bank.

8A1lnC Cl 8lvA1L SL

lSSn
vCLuML:2,lSSuL:1
!AnuA8?
Research Problem
people. Each of them is interested i
s study, the AHP is used to develop and validate a model for rating of banks. Furthermore, a Excel
On the basis of the pair
Research Methodology
factors have been collected f
the application of the model
quantitative criteria are based on sub
Profitability Criteria is based on
8A1lnC Cl 8lvA1L SL

lSSn:2320-8236
vCLuML:2,lSSuL:1
!AnuA8?-MA8CP2014
people. Each of them is interested in specific bank business segment and each of them requires specific information
On the basis of the pair-wise comparisons, weights (Priority vector) of elements of the hierarchy structure are

factors have been collected for the period (2000
the application of the model. AHP Model is applied for rating the banks.
quantitative criteria are based on sub- criterias which are Financial Ratios.
Profitability Criteria is based on two sub
8A1lnC Cl 8lvA1L SLC1C8 8AnkS uSlnC AnA

8236

MA8CP2014
n specific bank business segment and each of them requires specific information
qualitative and quantitative criteria and the results of these comparisons (calculated weights of the criteria and
2) On each hierarchy structure level, the pair-wise comparisons should be done by comparing all Possible pairs of
the elements of this level, starting with the top of the hierarchy and working this way to the lowest level.
wise comparisons, weights (Priority vector) of elements of the hierarchy structure are
or the period (2000-10) but an average figure of each factor have been considered for
. AHP Model is applied for rating the banks.
criterias which are Financial Ratios.
two sub-criterias i.e. Return on Assets & Return on Equity(Financial
Ratios).Management Criteria depends on two sub-
C1C8 8AnkS uSlnC AnAL?1lC PlL8A8CP? 8CC

he results of these comparisons (calculated weights of the criteria and
The Analytic Hierarchy Process (AHP) is a powerful and flexible decision making process which is helpful in
wise comparisons should be done by comparing all Possible pairs of
the top of the hierarchy and working this way to the lowest level.
10) but an average figure of each factor have been considered for
criterias i.e. Return on Assets & Return on Equity(Financial
-criterias i.e. Profit per employee & Business per employee
(Financial ratios) & Liquidity is based on two sub- criterias i.e. Cash dep
L?1lC PlL8A8CP? 8CC
* u8. PA8SP u8CPl1

source of information is annual reports of the banks. Annual reports are generated yearly by bank and present a
l and flexible decision making process which is helpful in
calculated. Numbers of numerical calculations are made to get weight for each decision making element.Researchers
purpose of rating . Five criterias have been undertaken for rating . The data for quantitative as well as qualitative
criterias i.e. Profit per employee & Business per employee
criterias i.e. Cash dep
On the bottom level of the hierarchy are the alternatives i.e. three banks namely ICICI Bank , HDFC Bank & AXIS
L?1lC PlL8A8CP? 8CCLSS
u8. PA8SP u8CPl1, ** M8S. MAnSl MA1Pu8

ts are generated yearly by bank and present a
exploitable through financial ratios. Financial ratios are the product of Annual reports and can be calculated from the
be considered. The AHP is one of the most widely exploited decision making methods in cases when the decision
each decision making element.Researchers
The data for quantitative as well as qualitative
The goal of the study is to rate the banks & on the basis of results find the best bank on the basis of qualitative &
quantitative criterias. Four quantitative criterias namely Profitability, Capital Adequacy , Management &
criterias i.e. Cash deposit ratio & Credit deposit Ratio
mely ICICI Bank , HDFC Bank & AXIS
M8S. MAnSl MA1Pu8

can be calculated from the
s study, the AHP is used to develop and validate a model for rating of banks. Furthermore, a Excel-
hods in cases when the decision
(the selection of given alternatives and their prioritizing) is based on several criteria (Sub-criteria). Complex
on the basis of qualitative &
tal Adequacy , Management &
osit ratio & Credit deposit Ratio
M8S. MAnSl MA1Pu8

can be calculated from the
-based
hods in cases when the decision
criteria). Complex
decision problem solving, which this method uses, is based on the problem decomposition into a hierarchy structure
1)The hierarchy model of the decision problem is developed in such a way that the goal is positioned at the top, with
on the basis of qualitative &
tal Adequacy , Management &
osit ratio & Credit deposit Ratio
(Financial ratios) . Researchers have based Capital Adequacy on Capital Adequacy ratio. There are no sub-

Return on
Equity
Profitability

Step :1 The decision hierarchy is formulated with goals, criteria, sub criteria & alternatives

Step: 2 Pair wise comparison of each element with each at each level, Normalization Procedure & calculation of
consistency ratio.
A pair wise comparison is the process of comparing the relative importance, prefere
elements with respect to another element (the goal) in the level above. The Pair
that ranges from equally preferred to extremely preferred.
After developing a
respect to criteria & for each alternatives with respect to sub
matrix is carried out & by averaging the values in each row the researchers get P
later used to get the corresponding rating of each alternative. The sum of priority vector value of each criteria / sub
criteria should be equal to 1. Consistency ratio (CR) is calculated. The purpose of calculating c
make sure that the original preference ratings were consistent.
CR = CI/RI, where CI stands for consistency Index, CI is calculated by using Excel Matrix Multiplication Function
& RI stands for Random Index. To know the value of RI
value n. If CR> 0.10), then we are not consistent enough then the researchers need to go back and revise the
comparisons.
Pair wise comparison of criterias (Table 1)
Goal
CG
CA
L
P
M
Total

Return on Return on
Assets
Profitability

8A1lnC Cl 8lvA1L SL

lSSn
vCLuML:2,lSSuL:1
!AnuA8?
2 Pair wise comparison of each element with each at each level, Normalization Procedure & calculation of
consistency ratio.
After developing a pair-
comparisons.
CG
1
3
3
3
3
12

Return on

Capital Adequacy
Capital
Adequacy ratio
8A1lnC Cl 8lvA1L SL

lSSn:2320-8236
vCLuML:2,lSSuL:1
!AnuA8?-MA8CP2014
-wise comparisons matrix for each
CA
0.33
1
0.67
0.67
0.67
3.34

Rating & Choosing

Cash dep
8aLlo
Capital Adequacy
Adequacy ratio

8236

MA8CP2014
wise comparisons matrix for each
L
0.33
1.5
1
3
2
7.5

Rating & Choosing
Criterias (5)
Cash deposlL

Liquidity
Alternatives

wise comparisons matrix for each criteria with respect to goal, each sub
respect to criteria & for each alternatives with respect to sub- criterias , the procedure of normalization of each
& RI stands for Random Index. To know the value of RI, we look up at the Random indices table & it depends on
P
0.33
1.5
0.33
1
2
4.83

Rating & Choosing the best bank
Criterias (5)
CredlL
deposlL raLlo
Liquidity
Alternatives
L?1lC PlL8A8CP? 8CC
* u8. PA8SP u8CPl1


elements with respect to another element (the goal) in the level above. The Pair-wise Comparisons uses Saaty scale
criteria with respect to goal, each sub
criterias , the procedure of normalization of each
matrix is carried out & by averaging the values in each row the researchers get Priority Vector or weights which are
, we look up at the Random indices table & it depends on

0.33
1.5
0.33

4.83
best bank

deposlL raLlo
Corporate Governance

Step :1 The decision hierarchy is formulated with goals, criteria, sub criteria & alternatives.
A pair wise comparison is the process of comparing the relative importance, preference or likelihood of two
wise Comparisons uses Saaty scale
criteria with respect to goal, each sub
riority Vector or weights which are
criteria should be equal to 1. Consistency ratio (CR) is calculated. The purpose of calculating consistency ratio is to
M
0.33
1.5
0.5
0.5
1
3.83

Corporate Governance
M8S. MAnSl MA1Pu8

nce or likelihood of two
criteria with respect to goal, each sub-criterias with
onsistency ratio is to
Priority Vector
0.07831
0.29692
0.16092
0.24206
0.28288
1
C.R = 0.05
roflL
per
employe
Management Corporate Governance
M8S. MAnSl MA1Pu8

nce or likelihood of two
criterias with
onsistency ratio is to
ector
0.07831
0.29692
0.16092
0.24206
0.28288
C.R = 0.05
8uslness
per
employee
Management

8uslness
employee

Note: - CG for Corporate Governance, CA for Capital Adequac
Management
The researchers have compared all the five criterias with each other with respect to the goal. For instance, the
researchers have moderately preferred capital adequacy over corporate governance
have been assigned. Priority vector value of capital adequacy is the highest , so capital adequacy is preferred the
most over other criterias. The consistency ratio is 0.05 which is less than 0.10 which shows that origin
preference ratings were consistent.
Pair wise comparison of sub
Profitability
Note:- ROE for Return on equity& ROA for
The researchers have compared the sub criterias i.e. Return on equity ratio & Return on Assets ratio with respect to
Profitability criteria. Priority vector value of ROA is more than ROE, so it is more preferred than ROE by
researchers. T
original preference ratings were consistent.
Liquidity
Cash Deposit
Credit Deposit
The researchers have compared the sub criterias i.e. Cash deposit ratio & credit deposit ratio with respect to
Liquidity criteria. Priority vector value of
by researchers. The consistency ratio is 0 which shows Perfect consistency and since it is less than 0.10 it proves
that original preference ratings were consistent
Management
Note:- BPE for Business per employee ratio & PPE for profit per employee ratio
The researcher
respect to Management criteria. Priority vector value of Business per employee ratio is more than profit per
employee ratio, so it is more preferred by res
and since it is less than 0.10 it proves that original preference ratings were consistent.
Pair wise comparison of alternatives
Table 5
Corporate
Governance
ICICI
HDFC
AXIS
Total

All three alternatives are compared with each other with respect to the corporate governance criteria, since there is
no sub criteria for corp
decided that HDFC is
HDFC bank has the highest value of priority vector for cor
The consistency ratio is 0.06
Table 6

8A1lnC Cl 8lvA1L SL

lSSn
vCLuML:2,lSSuL:1
!AnuA8?
CG for Corporate Governance, CA for Capital Adequac
Management
Profitability
ROE
ROA
Total

ROE for Return on equity& ROA for
researchers. The consistency ratio is 0 which shows Perfect consistency and since it is less than 0.10 it proves that
Liquidity
Cash Deposit
Credit Deposit
Total

comparison of sub
Management
BPE
PPE
Total

BPE for Business per employee ratio & PPE for profit per employee ratio
The researchers have compared the sub criterias i.e. Business per employee ratio & profit per employee ratio with
ICICI
criteria for corp
decided that HDFC is Equally to moderately preferred over ICICI Bank so a value of (1/2) i.e. 0.5 is assigned.
The consistency ratio is 0.06
8A1lnC Cl 8lvA1L SL

lSSn:2320-8236
vCLuML:2,lSSuL:1
!AnuA8?-MA8CP2014
Pair wise comparison of sub- criterias of profitability (Table 2)
ROE for Return on equity& ROA for
he consistency ratio is 0 which shows Perfect consistency and since it is less than 0.10 it proves that
Pair wise comparison of sub- criterias of Liquidity (Table 3)
Cash Deposit
comparison of sub- criterias of Management (Table 4)
s have compared the sub criterias i.e. Business per employee ratio & profit per employee ratio with
ICICI
1
2
3
6

criteria for corporate governance so they are compared with criteria. For instance researchers have
Equally to moderately preferred over ICICI Bank so a value of (1/2) i.e. 0.5 is assigned.
The consistency ratio is 0.06 and since it is less than 0.10 it proves that original preference ratings are consistent.

8236

MA8CP2014
criterias of profitability (Table 2)
ROE
1
2.5
3.5

ROE for Return on equity& ROA for Return on Assets
criterias of Liquidity (Table 3)
Cash Deposit
1
2
3

Liquidity criteria. Priority vector value of credit deposit ratio is more than Cash deposit ratio, so it is more preferred
criterias of Management (Table 4)
BPE
1
0.4
1.4

employee ratio, so it is more preferred by researchers. The consistency ratio is 0 which shows Perfect consistency
HDFC
0.5
1
0.67
2.17

orate governance so they are compared with criteria. For instance researchers have
and since it is less than 0.10 it proves that original preference ratings are consistent.

CG for Corporate Governance, CA for Capital Adequacy, L for Liquidity, P for Profitability & M for
criterias of profitability (Table 2)
Return on Assets
criterias of Liquidity (Table 3)
Credit Deposit
credit deposit ratio is more than Cash deposit ratio, so it is more preferred
criterias of Management (Table 4).
earchers. The consistency ratio is 0 which shows Perfect consistency
HDFC

0.67
2.17
HDFC bank has the highest value of priority vector for corporate governance, so it is the best bank for this criteria .
L?1lC PlL8A8CP? 8CC
* u8. PA8SP u8CPl1

y, L for Liquidity, P for Profitability & M for
ROA
0.4
1
1.4

Credit Deposit
0.5
1
1.5

PPE
2.5
1
3.5

AXIS
0.33
1.5
1
2.83

porate governance, so it is the best bank for this criteria .

researchers have moderately preferred capital adequacy over corporate governance ,so a value of (1/3) i.e. 0.33
M8S. MAnSl MA1Pu8

,so a value of (1/3) i.e. 0.33
Priority Vector
0.28571
0.71429
1
C.R =0
Priority Vector
0.33333
0.66667
1
C.R= 0
Priority Vector
0.71429
0.28571
1
C.R =0
Priority Vector
0.17123
0.4414
0.38737
1
C.R = 0.06
M8S. MAnSl MA1Pu8


,so a value of (1/3) i.e. 0.33
most over other criterias. The consistency ratio is 0.05 which is less than 0.10 which shows that original

Capital
Adequacy
ICICI
HDFC
AXIS
Total

All three alternatives are compared with each other with respect to the Capital adequacy criteria,
one sub criteria i.e Capital adequacy ratio so they are compared with respect to it . Researchers have decided that
ICICI is M
same manner values have assigned for rest of the comparisons. ICICI bank has the highest value of priority vector
for Capital Adequacy
0.10 it proves
Table 7
Cash deposit ratio
ICICI
HDFC
AXIS
Total

All three alternatives are
Researchers have decided that AXIS Bank is M
assigned & similarly by using the scale in the same manne
bank has the highest value of priority vector for cash deposit ratio, so it is the best bank for this sub
consistency ratio is 0.02
Table 8
Credit deposit ratio
ICICI
HDFC
AXIS
Total

All three alternatives are compared with each other
Researchers have decided that ICICI Bank is
similarly by using the scale in the same manner values have assigned for rest of
the highest value of priority vector for Credit deposit ratio , so it is the best bank for this sub
Table 9
Return on Assets
ICICI
HDFC
AXIS
Total

All three alternatives are compared with each other with respect to the
Researchers have decided that AXIS Bank is Equally
similarly by using the scale in the same manner values have assigned for rest of the comparisons. HDFC ban
the highest value of priority vector for
Table 10
Return on equity
ICICI
HDFC

8A1lnC Cl 8lvA1L SL

lSSn
vCLuML:2,lSSuL:1
!AnuA8?
Capital
Adequacy ICICI
criteria i.e Capital adequacy ratio so they are compared with respect to it . Researchers have decided that
ICICI is Moderately preferred over Axis bank so a value of 3 is assigned.& similarly by using the scale in the
Capital Adequacy , so it is the best bank for this criteria .The consistency ratio is 0.01
0.10 it proves that original preference ratings were consistent.
Cash deposit ratio
ICICI
HDFC
AXIS
Total
All three alternatives are
consistency ratio is 0.02 and since it is less than 0.10 it proves that orig
Credit deposit ratio
consistency ratio is 0.05 and since it is less than 0.10 it proves that original preference ratings wer
Return on Assets

alternatives are compared with each other with respect to the
turn on equity

8A1lnC Cl 8lvA1L SL

lSSn:2320-8236
vCLuML:2,lSSuL:1
!AnuA8?-MA8CP2014
ICICI
1
0.67
0.33
1

oderately preferred over Axis bank so a value of 3 is assigned.& similarly by using the scale in the
, so it is the best bank for this criteria .The consistency ratio is 0.01
that original preference ratings were consistent.
ICICI
1
1.6
3
5.6

All three alternatives are compared with each other with respect to the sub criteria i.e. Cash deposit ratio.
and since it is less than 0.10 it proves that orig
ICICI
1
0.2
0.2
1.4

and since it is less than 0.10 it proves that original preference ratings wer
ICICI
1
1.8
1
3.8

consistency ratio is 0.008 and since it is less than 0.10 it proves that original preference ratings were consistent.
ICICI
1
3

8236

MA8CP2014
HDFC
1.5
1
0.33
2.83

HDFC
0.62
1
3
4.62

compared with each other with respect to the sub criteria i.e. Cash deposit ratio.
Researchers have decided that AXIS Bank is Moderately preferred over ICICI bank so a value of (1/3) i.e. 0.33 is
HDFC
5
1
0.5
6.5

Researchers have decided that ICICI Bank is Strongly preferred over HDFC bank so a value of 5 is assigned.&
HDFC
0.55
1
0.77
2.32

the highest value of priority vector for Return on Assets
HDFC
0.33
1

HDFC

0.33
2.83
HDFC
0.62

4.62
oderately preferred over ICICI bank so a value of (1/3) i.e. 0.33 is
assigned & similarly by using the scale in the same manner values have assigned for rest of the comparisons. Axis
HDFC

All three alternatives are compared with each other with respect to the sub criteria i.e. credit deposit ratio.
Strongly preferred over HDFC bank so a value of 5 is assigned.&
HDFC
0.55

0.77
2.32
Researchers have decided that AXIS Bank is Equally preferred over ICICI bank so a value of 1 is assigned &
Return on Assets ratio , so it is the best bank for this sub
HDFC
0.33

L?1lC PlL8A8CP? 8CC
* u8. PA8SP u8CPl1

AXIS
3
3
1
7

AXIS
0.33
0.33
1
1.66

r values have assigned for rest of the comparisons. Axis
AXIS
5
2
1
8

with respect to the sub criteria i.e. credit deposit ratio.
AXIS
1
1.3
1
3.3

alternatives are compared with each other with respect to the sub criteria ie Return on Assets ratio.
preferred over ICICI bank so a value of 1 is assigned &
ratio , so it is the best bank for this sub
AXIS
0.25
0.33

, so it is the best bank for this criteria .The consistency ratio is 0.01 and since it is less than
inal preference ratings were consistent.
similarly by using the scale in the same manner values have assigned for rest of the comparisons. ICICI bank has
Priority Vector
sub criteria ie Return on Assets ratio.
ratio , so it is the best bank for this sub
M8S. MAnSl MA1Pu8

Priority Vector
0.48648
0.37194
0.14158
1
C.R =0.01
All three alternatives are compared with each other with respect to the Capital adequacy criteria, since there is only
and since it is less than

Priority Vector
0.17124
0.23398
0.59479
1
C.R =0.02
bank has the highest value of priority vector for cash deposit ratio, so it is the best bank for this sub-criterion. The

Priority Vector
0.70284
0.18223
0.11493
1
C.R =0.05
the comparisons. ICICI bank has
the highest value of priority vector for Credit deposit ratio , so it is the best bank for this sub-criterion .The
Priority Vector
0.26775
0.43289
0.29936
1
C.R =0.008
ratio , so it is the best bank for this sub-criterion .The
Priority Vector
0.12005
0.27154
M8S. MAnSl MA1Pu8

since there is only

and since it is less than
criterion. The
the comparisons. ICICI bank has
criterion .The
e consistent.
similarly by using the scale in the same manner values have assigned for rest of the comparisons. HDFC bank has
criterion .The

AXIS
Total

All three alternatives are compared with each other with respect to the sub criteria i.e. Return on e
bank has the highest value of priority vector for
.The consistency ratio is 0.06
Table 11
Profit per
employee
ICICI
HDFC
AXIS
Total

All three alternatives are compared with each other with respect to the sub
Researchers have decided that AXIS Bank is
similarly by using the scale in the same manner values have assigned for rest of the comparisons. ICICI
highest value of priority vector for
it is less than 0.10 it proves that original preference ratings were consistent.
Table 12
Business per
employee
ICICI
HDFC
AXIS
Total

All three alternatives are compared with each other with respect to the sub criteria i.e. Business per Employee ra
Researchers have decided that HDFC Bank is
.Axis bank has the highest value of priority vector for Business
criteria. The consistency
consistent
Step 3: Calculation of Global weights & Rating of Alternatives
After calculation of Consistency ratio for each pair wise comparison matrix. Researche
Weight (priority vector value) of each sub
Global weight value . For each alternatives global weights value have to be determined. So we multiplied
Weight ( priority vector value) of each alternative with that of Global weight value calculated above.
Lastly by adding the global weight of each alternative for each sub
highest value will hav
Calculation of Global weights (Table 13)
Criteria
Corporate
Governance
Capital Adequacy
Liquidity

8A1lnC Cl 8lvA1L SL

lSSn
vCLuML:2,lSSuL:1
!AnuA8?
.The consistency ratio is 0.06
Profit per
employee

0.333333
1.583333
alternatives are compared with each other with respect to the sub
highest value of priority vector for
Business per
employee ICICI

criteria. The consistency

Calculation of Global weights & Rating of Alternatives
highest value will have the highest rating & will be considered as the best bank
Criteria Local
weight
Corporate
Governance
0.078
Capital Adequacy 0.297
Liquidity 0.161
8A1lnC Cl 8lvA1L SL

lSSn:2320-8236
vCLuML:2,lSSuL:1
!AnuA8?-MA8CP2014
4
8

.The consistency ratio is 0.06 and since it is less than 0.10 it proves that original preference ratings were consist
ICICI
1
0.25
0.333333
1.583333

highest value of priority vector for Profit per employee
ICICI
1
0.33
3
4.33

ratio is 0.06 and since it is less than 0.10 it proves that original preference ratings were
e the highest rating & will be considered as the best bank
Local
weight
Sub- criteria
0.078

0.297
Capital
Adequacy
Ratio
0.161
Cash Deposit
Ratio

8236

MA8CP2014
3
4.33

bank has the highest value of priority vector for Return on equity
and since it is less than 0.10 it proves that original preference ratings were consist
HDFC
4
1
2
7

Researchers have decided that AXIS Bank is Moderately preferred over ICICI bank so a value of 3 is assigned &
Profit per employee
HDFC
3
1
4
8

Researchers have decided that HDFC Bank is Moderately preferred over ICICI bank so a value of 3 is assigned
and since it is less than 0.10 it proves that original preference ratings were
Weight (priority vector value) of each sub- criteria with its parents criterias priority vector value in order to get
criteria Local
weight

Capital
Adequacy
Ratio
-
Cash Deposit
Ratio
0.33

4.33
Return on equity
HDFC

Moderately preferred over ICICI bank so a value of 3 is assigned &
Profit per employee, so it is the best bank. The consistency ratio is 0.02
HDFC

Moderately preferred over ICICI bank so a value of 3 is assigned
.Axis bank has the highest value of priority vector for Business per employee
criteria with its parents criterias priority vector value in order to get
Local
weight
Global weight
0.078
0.297
0.33

0.053

L?1lC PlL8A8CP? 8CC
* u8. PA8SP u8CPl1

1
1.58

ratio, so it is the best bank for this sub
AXIS
3
0.5
1
4.5

alternatives are compared with each other with respect to the sub criteria i.e
, so it is the best bank. The consistency ratio is 0.02
AXIS
0.33
0.25
1
1.58

per employee , so it is the best bank for this sub
Lastly by adding the global weight of each alternative for each sub criteria / criterias the alternative which has the
Global weight Alternatives
0.078
ICICI
HDFC
AXIS
0.297
ICICI
HDFC
AXIS
0.053
ICICI
HDFC
AXIS

ratio, so it is the best bank for this sub
criteria i.e Profit per employee
, so it is the best bank. The consistency ratio is 0.02
, so it is the best bank for this sub
After calculation of Consistency ratio for each pair wise comparison matrix. Researchers have multiplied the Local
criteria / criterias the alternative which has the
Alternatives Local
Priority
ICICI
HDFC
AXIS
0.17
0.44
0.39
ICICI
HDFC
AXIS
0.49
0.37
0.14
ICICI
HDFC
AXIS
0.17
0.23
0.6
M8S. MAnSl MA1Pu8

0.60841
1
C.R = 0.06
All three alternatives are compared with each other with respect to the sub criteria i.e. Return on equity ratio
ratio, so it is the best bank for this sub-criterion
Priority Vector
0.62322
0.13729
0.23949
1
C.R = 0.02
Profit per employee
similarly by using the scale in the same manner values have assigned for rest of the comparisons. ICICI bank has the
, so it is the best bank. The consistency ratio is 0.02 and since

Priority Vector
0.27216
0.11970
0.60814
1
C.R = 0.06
, so it is the best bank for this sub
rs have multiplied the Local
Global weight value . For each alternatives global weights value have to be determined. So we multiplied the Local
Local
Priority
Global Priority
0.17
0.44
0.39
0.0133
0.0343
0.0304
0.49
0.37
0.14

0.147
0.111
0.042

0.17
0.23

0.0
0.0122
0.0319
M8S. MAnSl MA1Pu8

quity ratio Axis

criterion
Profit per employee ratio.
bank has the
and since
All three alternatives are compared with each other with respect to the sub criteria i.e. Business per Employee ratio.
, so it is the best bank for this sub-
rs have multiplied the Local
the Local
Global Priority
0.0133
0.0343
0.0304

0.147
0.111
0.042

0.009
0.0122
0.0319

Profitability

Management

Table 14
A (Banks)

ICICI
HDFC
AXIS
A-Alternatives, CDR
For each alternative we add the values horizontally & get the total values. The bank having the highest total will
have the highest rating followed by other banks. ICI
Axis Bank & lastly HDFC Bank.
Conclusion
The Researchers are able to identify the objectives, criteria & sub criterias relevant for rating the banks & develop a
hierarchy structure based on
best in the criterias & sub
Bank & lastly by HDFC Bank.
References
1) Dejan ehuli
University of Zagreb, Croatia.
2) Javalgi, Rajshekhar G., Armacost, Robert L. Hosseini, Jamshid C,1989,
of consumer bank selection decisions
3) Jeff Kunz, 2010, The Analytic Hierarchy Process, Eagle City Hall Location Options Task Force
4)Khwanruthai Bunruamk
Environmental Sciences, University of Tsukuba
5) Maggie C.Y. Tama, V.M. Rao Tummala,2001,: An application of the AHP in vendor selection of a
international journal of management science, Eastern Michigan University.
6) Saaty, T. L., 2008,
7) Tihomir Hunjak,
informatics, University of Zagreb.

8A1lnC Cl 8lvA1L SL

lSSn
vCLuML:2,lSSuL:1
!AnuA8?

0.242

Management
0.282

CG CA

0.0133 0.147
0.0343 0.111
0.0304 0.042
Alternatives, CDR- Cash deposit ratio & Cr DR
Conclusion
hierarchy structure based on
best in the criterias & sub
References
ehuli, Tihomir Hunjak, Nina Begi
University of Zagreb, Croatia.
of consumer bank selection decisions
4)Khwanruthai Bunruamkaew,2012 ,How to do AHP Analysis in Excel ,
6) Saaty, T. L., 2008, Multicriteria Decision Making: The Analytic Hierarchy Process
ir Hunjak, Drago Jakov
8A1lnC Cl 8lvA1L SL

lSSn:2320-8236
vCLuML:2,lSSuL:1
!AnuA8?-MA8CP2014

Credit Deposit
Ratio

0.242

Return on
Assets

Return on
Equity
0.282

Business Per
Employee

Profit Per
Employee
CA
CDR
0.147 0.009
0.111 0.0122
0.042 0.0319
Cash deposit ratio & Cr DR
hierarchy structure based on AHP model. Also On the basis of the model we are able to analyze which bank is the
best in the criterias & sub-criterias. ICICI bank has the highest overall total, is rated the best followed by AXIS
, Tihomir Hunjak, Nina Begi

of consumer bank selection decisions, Journal of Business Research, Vol 19, Issue 1, pp. 33
aew,2012 ,How to do AHP Analysis in Excel ,
Multicriteria Decision Making: The Analytic Hierarchy Process
Jakovevi, 2001, AHP based model for bank performance evaluation and rating

8236

MA8CP2014
Credit Deposit
Ratio

0.67

Return on

0.71

Return on
Equity
0.29

Business Per
Employee
0.71
Profit Per
Employee
0.29

L
CDR Cr DR
0.009 0.0755
0.0122 0.0194
0.0319 0.0161
Cash deposit ratio & Cr DR- Credit Deposit Ratio
have the highest rating followed by other banks. ICICI Bank has the highest total, and the highest rank, followed by
AHP model. Also On the basis of the model we are able to analyze which bank is the
criterias. ICICI bank has the highest overall total, is rated the best followed by AXIS
evi, 2011, Comparison of a Bank's Financial
, Journal of Business Research, Vol 19, Issue 1, pp. 33
aew,2012 ,How to do AHP Analysis in Excel ,

, 2001, AHP based model for bank performance evaluation and rating

0.107

0.71

0.172

0.29 0.0702

0.71 0.2002
0.29
0.0819
ROE
0.008
0.019
0.043
Credit Deposit Ratio
CI Bank has the highest total, and the highest rank, followed by
Comparison of a Bank's Financial
2) Javalgi, Rajshekhar G., Armacost, Robert L. Hosseini, Jamshid C,1989, Using the analytic hierarch
, Journal of Business Research, Vol 19, Issue 1, pp. 33
aew,2012 ,How to do AHP Analysis in Excel , Division of Spatial Information Science ,Graduate School of Life and
L?1lC PlL8A8CP? 8CC
* u8. PA8SP u8CPl1

0.107
ICICI
HDFC
AXIS
0.172
ICICI
HDFC
AXIs
0.0702
ICICI
HDFC
AXIS
0.2002
ICICI
HDFC
AXIS
0.0819
ICICI
HDFC
AXIS
P
ROA
0.046
0.074
0.052
Credit Deposit Ratio
Comparison of a Bank's Financial Ratios Using the Analytic Hierarchy Process
Using the analytic hierarch
, Journal of Business Research, Vol 19, Issue 1, pp. 33-49,
Division of Spatial Information Science ,Graduate School of Life and
Multicriteria Decision Making: The Analytic Hierarchy Process, RWS Publications, 4922 Ellsworth Ave., Pittsburgh,

ICICI
HDFC
AXIS

0.7
0.18
0.15
HDFC
AXIs

0.27
0.43
0.3
CICI
HDFC
AXIS
0.12
0.27
0.61
ICICI
HDFC
AXIS
0.27
0.12
0.61
ICICI
HDFC
AXIS
0.62
0.14
0.24
M
BPE
0.0541
0.0244
0.1221
Ratios Using the Analytic Hierarchy Process
Using the analytic hierarchy process for bank management: Analysis
5) Maggie C.Y. Tama, V.M. Rao Tummala,2001,: An application of the AHP in vendor selection of a telecommunications system, Omega The
, RWS Publications, 4922 Ellsworth Ave., Pittsburgh,
, 2001, AHP based model for bank performance evaluation and rating, Faculty of organization and
M8S. MAnSl MA1Pu8

0.7
0.18
0.15

0.0755
0.0194
0.0161

0.27
0.43
0.3

0.046
0.074
0.052

0.12
0.27
0.61

0.008
0.019
0.043
0.27
0.12
0.61

0.054
0.024
0.122
0.62
0.14
0.24

0.051
0.011
0.020
Total
PPE
0.0507 0.4036
0.0114 0.3053
0.0196 0.3571
Ratios Using the Analytic Hierarchy Process
y process for bank management: Analysis
telecommunications system, Omega The
Faculty of organization and
M8S. MAnSl MA1Pu8

0.0755
0.0194
0.0161

0.046
0.074
0.052
0.008
0.019
0.043

0.054
0.024
0.122

0.051
0.011
0.020

Total

0.4036
0.3053
0.3571
Ratios Using the Analytic Hierarchy Process,
y process for bank management: Analysis
telecommunications system, Omega The
Faculty of organization and

0.0755
0.0194
0.0161

Drharshpurohi Mansi Mathur

Hochgeladen von

Dokumentinformationen

Originalbeschreibung:

Copyright

Verfügbare Formate

Dieses Dokument teilen

Dokument teilen oder einbetten

Freigabeoptionen

Stufen Sie dieses Dokument als nützlich ein?

Sind diese Inhalte unangemessen?

Copyright:

Verfügbare Formate

Drharshpurohi Mansi Mathur

Hochgeladen von

Copyright:

Verfügbare Formate

1)

Rating of Private Sector Banks using Analytic Hierarchy Process

y, L for Liquidity, P for Profitability & M for

since there is only

quity ratio Axis

Das könnte Ihnen auch gefallen