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Ranking of EU National Banking Systems Using Multi-Criteria Analysis in the Light of Brexit

Author

Listed:
  • Magdalena Radulescu

    (Faculty of Economic Studies, University of Pitesti, Romania)

  • Aleksandra Fedajev

    (Technical Faculty in Bor, University of Belgrade, Serbia)

  • Djordje Nikolic

    (Technical Faculty in Bor, University of Belgrade, Serbia)

Abstract

In order to define and implement the most effective measures to overcome the difficulties of the post-crisis period, the policy-makers of ECB must identify not just main weaknesses of each banking system, but their strong points also. This requires the application of multi-criteria analysis, considering that policy-makers need to take into account a number of different aspects that, on the whole, indicate the quality of the banking system. Our aim is a comparative analysis of European banking systems right after the Brexit moment and within the framework of the tight new Basel III regulations. In this paper, we have ranked the banking systems of the 28 EU member states using multi-criteria analysis, specifically the PROMETHEE II method. The use of the PROMETHEE II method in combination with the entropy method offers a comprehensive insight into the banking system of each member state, given that the observed countries are ranked according to 9 conflicting criteria that are mostly used in banking system analysis. Our analysis shows that the banking systems in Central and Eastern Europe are the best performers, while the EMU’s developed banking systems such as the German, Italian, British, and French one are positioned among the last ranked. The Portuguese and Greek banking systems are, as expected, ranked in the last positions in our list. The obtained results also pointed out that the ECB should change its approach to the management and further development of a European Banking Union.

Suggested Citation

  • Magdalena Radulescu & Aleksandra Fedajev & Djordje Nikolic, 2017. "Ranking of EU National Banking Systems Using Multi-Criteria Analysis in the Light of Brexit," Acta Oeconomica, Akadémiai Kiadó, Hungary, vol. 67(4), pages 473-509, December.
    • Handle: RePEc:aka:aoecon:v:67:y:2017:i:4:p:473-509
    Note: The author would like to thank Júlia Király, Judit Neményi and Dóra Piroska for their helpful comments on an earlier version of the paper.
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    More about this item

    Keywords

    multi-criteria analysis; PROMETHEE method; entropy method; European Union; banking systems; Brexit; European banking crisis; European Central Bank; European Banking Union;
    All these keywords.

    JEL classification:

    • C10 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - General
    • C82 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Methodology for Collecting, Estimating, and Organizing Macroeconomic Data; Data Access
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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