Ranking of the Lithuanian banks during the recession of 2008 - 2009 by the MULTIMOORA method

Abstract

The aim of this study is to do a critical analysis , on the basis of different objectives, the banks registered in Lithuania during the recession years 2008 - 2009 . As these banks work in the same ma cro - economic environment , the objectives are chosen on the basis of the CAMEL classification (‘C’ Capital adequacy, ‘A’ Asset quality, ‘M’ Management quality, ‘E’ Earnings, ‘L’ Liquidity) . Traditional Cost - Benefit Analysi s is not suitable enough for this . Indeed Cost - Benefit analysis translates all direct and indirect costs and other objectives ( benefits ) into money terms. On the contrary , Multi - Objective Optimization takes care of the different objectives, with objectives keep ing their own units. Di ffere nt methods exist for the application of Multi - Objective Optimization. In our research, we tested t hese methods for their robustness. MOORA (Multi - Objective Optimization by Ratio analysis) and MULTIMOORA (MOORA plus a Full Multiplicative Form), showed pos itive results on these tests. Therefore MULTIMOORA was chosen for the ranking of the Lithuanian Banks during the recession years 2008 - 2009.