Assessment of reputational risk impact on commercial banks financial performance

Abstract

The current study aims to determine criteria linked to a bank’s reputation and evaluate the effect of reputation on the commercial bank’s performance. In order to estimate the impact of reputation on a commercial bank’s performance, the expert evaluation method was chosen. The research was conducted in two steps: first, the unstructured (informal) interview was applied to extract the factors; second, the multicriteria decision methods such as SAW, COPRAS and geometric mean were employed for evaluating the determined factors. The research results showed that the weakest position of the commercial bank in terms of reputational risk implied the performance efficiency decrease. The conducted research contribute to the scientific literature by providing a methodology for assessing the impact of reputational risk on commercial bank’s performance. However, the methodology could be applied to those banks that do not provide services for individual customers but work with business clients only.