Using Bi-Level Programming to Evaluate Banking Operations

Abstract

The importance of performance evaluation in diagnosing the positive and negative cases of excellence of banks appears as it is a necessary means to achieve the extent to which banks can achieve the required level of performance. The research sought to evaluate the performance of banks through the use and application of one of the programming models that is rarely used in banking literature, which is the two-level programming model (quadratic - linear programming). The efficiency index for each banking process is either (1) or (zero). The process that... Achieving an efficiency score of (1) means that it is 100% efficient and falls within the limits of efficiency and achieves the highest returns of profits. As for the banking operation that has an efficiency index of (zero), this means that it does not achieve any return of profits. Thus, applying the two-level programming model determines the extent to which Each bank in the sample, which was taken as a random sample, reached (19) banks out of (65) banks, represented by Al-Rafidain Bank in the city of Baghdad, which was considered as a statistical population for the research for the year 2022. After addressing the theoretical aspect of two-level programming, which is considered one of the improvement issues. It is nested on two levels, one of which is the upper level, called the independent variable (Leader), and the other is represented by the lower level, called the dependent variable (Follower). Each level has a special function and has restrictions. In order to evaluate the upper and lower bounds, the Karch-Cohen-Tucker conditions were used, thus converting two-level programming into single-level programming, and thus applying Program (). The results of the analysis showed that there is a variation in performance between the banks in the research sample, as well as a variation in performance at the level of a single bank depending on the variation in percentages and quantities of profits achieved to which the research sample contributed, and through the results achieved, Al-Mansour Bank obtained first place among the sample banks. Whereas, the value of the objective function achieved for the bank reached (339,636,731), and Al-Mustansir Street Bank ranked (last) among the sample banks, as the value of the objective function achieved for the bank reached (337,791,490). The highest return on profits was achieved by the banks in the research sample from the banking operation (long-term loans) and its value reached (190,193,543), followed by the banking operation (personal advances), which amounted to (15,738,985), then the banking operation (short-term loans), whose value amounted to (8,104,846), and then the banking operation ( Debit current accounts, amounting to (1,847,239), and finally the banking transaction (discounted commercial papers), amounting to (43,720). The research concluded with a set of conclusions and recommendations.