A HOLISTIC APPROACH TO THE BANKING SECTOR: PERFORMANCE AND EFFICIENCY ANALYSIS OF TURKISH BANKS USING CoCoSo AND DEA METHODS

The banking sector is a vital component of global economies, playing a critical role in ensuring financial stability by gathering savings, providing credit, and facilitating various financial transactions. Banks not only support economic growth but also act as intermediaries between surplus and deficit units within the economy. Therefore, evaluating their financial performance and efficiency is crucial for understanding the overall health of the financial system. This study analyzes the financial performance and efficiency of the top 10 banks in Turkey, which are ranked by asset size, over a 10-year period from 2013 to 2022. Using the Combined Compromise Solution (CoCoSo) method, the study ranks these banks based on various financial criteria, such as capital adequacy, asset quality, liquidity, and profitability. CoCoSo is a multi-criteria decision-making method that allows for comprehensive performance analysis by considering multiple factors simultaneously. In addition to CoCoSo, Data Envelopment Analysis (DEA) is used to evaluate the efficiency of these banks in utilizing their resources to generate financial outputs. The study’s findings reveal that privatelyowned banks, particularly Akbank T.A.Ş., consistently rank at the top in terms of both financial performance and efficiency. Akbank’s strong performance is attributed to its effective resource utilization and strategic management decisions. State-owned banks, on the other hand, generally show lower financial performance, even though they exhibit high efficiency levels. This discrepancy suggests that public banks may be focusing on non-profit-driven projects that contribute to public welfare, which in turn affects their overall financial performance. Foreign-owned banks, such as Garanti Bankası and Denizbank, also demonstrate strong financial performance but show varying degrees of efficiency, with Denizbank being relatively less efficient in resource utilization. By employing both the CoCoSo and DEA methods, this study offers a unique dual-method approach that provides a comprehensive evaluation of the Turkish banking sector. The combination of these two methods allows for a more nuanced understanding of both financial performance and efficiency, offering valuable insights for policymakers, bank management, and researchers. The study not only highlights the strengths and weaknesses of individual banks but also underscores the importance of efficient resource management for sustaining competitive advantage in a highly dynamic banking environment. The results of this study can serve as a robust framework for future research on bank performance evaluation, especially in emerging markets. Moreover, the study’s methodology can be applied to other sectors or countries to provide cross-sectional and time-series analysis, contributing to the broader literature on financial performance and efficiency.