Bank efficiency evaluation and bankruptcy analysis model

Abstract

Banks play an important role in the economic and social development of a country, and bank failures can have numerous adverse effects on businesses and individuals. However, the frequency of international bank failures is so high that the analysis and prediction of the causes of international bank failures has received a lot of attention from many managers and academic researchers. This article selects data on 64 indicators of existing or failed banks in Poland from 2017 to 2021, and proposes a bank efficiency evaluation and bankruptcy analysis model in order to analyze the efficiency of bank failures in the context of studying the inputs and outputs of each bank, after which the five most important causes of failure are selected, based on which a failure risk prediction model is developed, through which representative banks are selected and specifically applied to other banks. Based on the principal component analysis method previously done, fuzzy component analysis was introduced for specific evaluation, while for the data of these banks to be used for the prediction of the risk of other banks, a banking system was created in this paper and a risk contagion model was introduced. Finally, specific calculations were performed for the time series model, and cluster analysis was performed using its residuals as the discriminant criterion to determine whether they came from the same bank. The research in this paper is more accurate in predicting the possibility of bank failures, and the approach used in this paper is more risk-averse than current techniques, minimizing losses from bank failures and providing more effective protection for citizens' property.