Using Fuzzy Analytic Hierarchy Process and Technique for Order of Preference by Similarity to the Ideal Solution in Performance Evaluation in the Albanian Banking Sector

The banking sector plays a key role in the economic, social, and political development of a country. The study of the financial performance of banks is essential for investors, creditors, and other interested parties. The aim of this research was to rank the second-tier banks in Albania by financial performance using a fuzzy multi-criteria decision model (fuzzy MCDM). For the ranking of banks, eight financial criteria were taken into account during the years 2020, 2021, and 2022 for 11 banks in the Albanian banking sector. Based on the selected indicators, a decision-making model was created. The Fuzzy Analytic Hierarchy Process (FAHP) and the Technique for Order of Preference by Similarity to the Ideal Solution (TOPSIS) methods were used in this research. The results of the FAHP method showed that the most important indicators are Equity and EBT. The results of the TOPSIS method showed that Banka Kombëtare Tregtare (BKT) had the best indicators for the observed years. The contribution of this research is in understanding the financial operations of banks in Albania.