Using a Multi-Criteria Group Decision Making Approach to Select Merged Strategies for Commercial Banks

  • Tien-Chin Wang
  • Ying-Ling Lin


This investigation develops an analytic hierarchy framework to help banks choose development strategies according to six main criteria comprising 41 attributes, namely management performance, staff rights and interests, customer orientation, financial analysis, government policy and risk management. Questionnaires are administered to compare the priorities of different criteria and the ratings of feasible developmental strategies amongst decision makers and respondents including bank superintendents (Department of Finance), economists, shareholders, customers, executives and staff of the Bank of Kaohsiung, Taiwan. Additionally, the analytic hierarchy process and consistent fuzzy preference relation are used to improve consistency and effectiveness in decision making. The analytical results reveal that risk management and customer orientation are the most important considerations for the Bank of Kaohsiung in the development of a strategy selection. Furthermore, the staff select the best futuristic policy on “focusing on core business competitiveness to become a specialized and stable bank,” whereas the other five groups choose the strategy of “merging with other finance organizations to become an existing bank.”


Finance merge Financial holding company Multi-criteria decision making Consistent fuzzy preference relation Analytic hierarchy process (AHP) 


  1. Bank of Kaohsiung workers union (2006)
  2. Banking Bureau, Financial Supervisory Commission (2006)
  3. Chen CP, Chiang HI, Lai YH (2003) The relationship between the determinants of commercial banks; lending decisions and loan quality. Manag Rev 22(2): 1–24Google Scholar
  4. Chiclana F, Herrera F, Herrera-Viedma E (1998) Integrating three representation models in fuzzy multipurpose decision making based on fuzzy preference relations. Fuzzy Sets Syst 97(1): 33–48. doi: 10.1016/S0165-0114(96)00339-9 CrossRefGoogle Scholar
  5. Chiclana F, Herrera F, Herrera-Viedma E (2001) Integrating multiplicative preference relations in a multipurpose decision-making model based on fuzzy preference relations. Fuzzy Sets Syst 122(2): 277–291. doi: 10.1016/S0165-0114(00)00004-X CrossRefGoogle Scholar
  6. Chiclana F, Herrera F, Herrera-Viedma E (2002) A note on the internal consistency of various preference representations. Fuzzy Sets Syst 131(1): 75–78. doi: 10.1016/S0165-0114(01)00256-1 CrossRefGoogle Scholar
  7. Chiclana F, Herrera-Viedma E, Herrera F, Alonso S (2007) Some induced ordered weighted averaging operators and their use for solving group decision-making problems based on fuzzy preference relations. Eur J Oper Res 182: 383–399. doi: 10.1016/j.ejor.2006.08.032 CrossRefGoogle Scholar
  8. Choi TY, Hartley JL (1996) An exploration of supplier selection practices across the supply chain. J Oper Manag 14: 333–343. doi: 10.1016/S0272-6963(96)00091-5 CrossRefGoogle Scholar
  9. Emel AB, Oral M, Reisman A, Yolalan R (2003) A credit scoring approach for the commercial banking sector. Socioecon Plann Sci 37: 103–123. doi: 10.1016/S0038-0121(02)00044-7 CrossRefGoogle Scholar
  10. Gerson RF (1993) Measuring customer satisfaction. Crisp Publication Inc., Menlo ParkGoogle Scholar
  11. Herrera F, Herrera-Viedma E, Chiclana F (2001) Multiperson decision making based on multiplicative preference relations. Eur J Oper Res 129: 372–385. doi: 10.1016/S0377-2217(99)00197-6 CrossRefGoogle Scholar
  12. Herrera-Viedma E, Herrera F, Chiclana F, Luque M (2004) Some issues on consistency of fuzzy preference relations. Eur J Oper Res 154: 98–109. doi: 10.1016/S0377-2217(02)00725-7 CrossRefGoogle Scholar
  13. Huang CY (2002) A summary of the financial holding company law. Hua Nan Invest Quart 21Google Scholar
  14. Luo X (2003) Evaluation the profitability and marketability efficiency of large banks: an application of data envelopment analysis. J Bus Res 56: 627–635. doi: 10.1016/S0148-2963(01)00293-4 CrossRefGoogle Scholar
  15. Mihelis G, Grigoroudis E, Siskos Y, Politis Y, Malandrakis Y (2001) Customer satisfaction measurement in the private bank sector. Eur J Oper Res 130: 347–360. doi: 10.1016/S0377-2217(00)00036-9 CrossRefGoogle Scholar
  16. Min DM, Kim JR, Kim WC, Min D, Ku S (1996) IBRS: intelligent bank reengineering system. Decis Support Syst 18: 97–105. doi: 10.1016/0167-9236(96)00021-8 CrossRefGoogle Scholar
  17. Morgan RE, Cronin E, Severn M (1995) Innovation in banking: new structures and systems. Long Range Plann 28: 91–100. doi: 10.1016/0024-6301(94)00093-K CrossRefGoogle Scholar
  18. Ngai EWT (2003) Selection of web sites for online advertising using the AHP. Inf Manag 40: 233–242. doi: 10.1016/S0378-7206(02)00004-6 CrossRefGoogle Scholar
  19. Peristiani S (1996) Do mergers improve the X-efficiency and scale efficiency of US banks? Evidence from 1980s. J Money Credit Bank 29(3): 326–327. doi: 10.2307/2953697 CrossRefGoogle Scholar
  20. Saaty TL (1980) The hierarchy process. McGraw-Hill, New YorkGoogle Scholar
  21. Salmeron JL, Herrero I (2005) An AHP-based methodology to rank critical success factors of executive information systems. Comput Stand Interfaces 28: 1–12. doi: 10.1016/j.csi.2004.09.002 CrossRefGoogle Scholar
  22. Thomson JB (1991) Prediction bank failures in the 1980s. Econ Rev 27: 9–20Google Scholar
  23. Wang TC, Chen YH (2005a) Comparing fuzzy preference relations and AHP as for the decision making. In: 2005 The 13th national conference on fuzzy theory and its applications, National Kaohsiung First University of Science and TechnologyGoogle Scholar
  24. Wang TC, Chen YH (2005b) Some issues on the consistency of fuzzy AHP. In: 2005 The 13th national conference on fuzzy theory and its applications, National Kaohsiung First University of Science and TechnologyGoogle Scholar
  25. Wang TC, Chen YH (2007) Applying consistent fuzzy preference relations to partnership selection. Omega 35(4): 384–388. doi: 10.1016/ CrossRefGoogle Scholar
  26. Wei CC, Chien CF, Wang MJ (2005) An AHP-based approach to ERP system selection. Int J Prod Econ 96: 47–62. doi: 10.1016/j.ijpe.2004.03.004 CrossRefGoogle Scholar
  27. Yu HC, Lee ZY, Chang SC (2005) Using a fuzzy multi-criteria decision making approach to evaluate alternative licensing mechanisms. Inf Manag 42: 517–531. doi: 10.1016/S0378-7206(04)00049-7 CrossRefGoogle Scholar

Copyright information

© Springer Science+Business Media B.V. 2008

Authors and Affiliations

  1. 1.Department of Information ManagementI-Shou UniversityTa-Hsu HsiangTaiwan, R.O.C.

Personalised recommendations