Application of Distribution-free Methods of Study for Identifying the Degree of Reliability of Ukrainian Banks

Abstract

Bank ratings are integral elements of information infrastructure that ensure sound development of the banking business. One of the key issues that the clients of banking structures are worried about is the issue of identification of the degree of reliability and trust to the bank. As of now there are no common generally accepted methods of bank rating and the issue of bank reliability is rather problematic. The article considers a modern DEA method of economic and mathematical analysis which is a popular instrument of assessment of quality of services of different subjects and which became very popular in foreign econometric studies. The article demonstrates application of the data encapsulation method (data envelopment analysis, DEA) for obtaining new methods of development of bank ratings and marks out incoming and outgoing indicators for building a DEA model as applied to the Ukrainian banking system. The authors also discuss some methodical problems that might appear when applying component indicators for ranging the subjects and offer methods of their elimination.

Keywords

• bank reliability
• ranging
• data encapsulation method
• envelope method
• DEA method
• CCR model