During the 1990’s, the financial deregulation policy fostered the rapid establishment of private banks. To cope with the overbanking problems, the Taiwan government conducted a series of financial reforms. Even the banking industry can enhance operational efficiency by merging or acquiring other financial institutions, or by consolidating the supervision of cross-financial industries to derive the synergy of financial markets. The operation performance is varied.
To explore the factors that affect banking performance in the Taiwanese banking industry, this research firstly employs the four perspectives of balanced scorecard as a framework to posit those factors by related literature and expert opinions. Although the balanced scorecard approach proposes four perspectives of performance evaluation, it does not explain the degree of influence of each perspectives and the relative weight of the factors. Therefore, this research adopts the hybrid MCDM model to investigate the relationship between perspectives and measure the mutual importance of each factor.
The research results show that the perspective of finance receives the heaviest influence from the other perspectives, whereas the perspective of learning and growth shows the strongest influence on the other perspectives. According to the Fig. 4.1 and Fig. 4.2, the four perspectives influence each other and are also ultimately linked to the perspective of finance. In other words, the achievement of financial goal can be improved by emphasizing the other perspectives. Our results are the same as the processes of the strategy map Kaplan and Norton (2004) intuitively proposed.
However, the strategy map that Kaplan and Norton proposed focuses on the uni-direction, while this research emphasizes the mutual influence of each perspective so that it can be closer to the original idea of the balanced scorecard. The
bank managers can achieve its goals by focusing on both financial and non-financial perspectives. In other words, the bank managers should not consider finance as a top priority. The employees’ professional knowledge, education and training of employees can enhance their level of professionalism to recognize customer needs, cross-sells, referrals, and customer service to improve the internal business processes of banking.
Moreover, the result of this research shows that the weight of financial holding companies and nonfinancial holding banks are different. Because the economy of scale and scope of financial holding companies is bigger than nonfinancial holding banks, the financial holding companies should utilize resource sharing to gain synergy. The non-financial holding banks can make use of higher autonomy in decision-making and provide more financial services by forming strategic alliances to improve performance.
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Appendix
The questionnaire of this research is divided into four parts: A. Example of questionnaire; B. Description of determinants; C. Comparison of the impact of the four perspectives; D. Comparison of the impact of the determinants; E. Personal Profile.
A. Example of questionnaire
Table 1 presents an example of the questionnaire for conducting the DEMATEL.
Each respondent was asked to evaluate the impact (i.e., the degree of controlling the decision-making process and the resource allocations) of a determinant on each of the other determinant using an integer scale (from 0 to 4). Table 1 shows that if C has a low direct influence on A, then a score of “1” is given to represent this low influence. Conversely, if the A has a high direct influence on the B, a score of ‘‘3’’
is assigned. A high score represents the belief that an improvement in the B depends strongly on an improvement in the A.
Table 1 Example of the questionnaire
A B C
A
3
B
C
1
Note: 0. No impact; 1. Low impact; 2. Medium impact; 3. High impact; 4. Very high impact
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B. Description of determinants
Perspectives Selection evaluation indexes Description Source (F1) Profit margin After-tax profit/ loss divided by total operating
revenues Saunders and Schumacher (2000); Chu (2008);
Wu (2011) (F2) Interest income The difference between the revenues generated by a
bank's assets and the expenses generated by a bank's liabilities
Rogers and Sinkey (1999); Saunders and Schumacher (2000); Huang et al. (2011)
Finance
(F3) Non-interest income Revenue that is not generated by its interest-earning
business Rogers and Sinkey (1999); Amidu and Wolfe (2013); Li and Zhang (2013)
(C1) Customer satisfaction Customer satisfaction of products and services provided by a bank
Christopher and David (1998); Zhang and Pan (2009); Sim et al. (2010)
(C2) Customer retention Capability of keeping existing customers Liu and Wu (2007); Huang et al. (2011) (C3) Market share rate A percentage of total sales volume in a market
captured by product or service
Chen (1999); Gande et. al. (1999) ; Wu (2011)
(C4) Cross-selling Offering current customer additional products or services that can provide added value for a bank
Liu and Wu (2007); Sonia and Bhatia (2014)
Customer
(C5) E-banking The use of computers to carry out banking
transactions Namchul and Donald (2002); Datta and Kundu (2011)
(P1) Transaction efficiency Average time spent on solving problems occurring
during transactions Chen (1999); Wu et al. (2010); Huang et al.
(2011) (P2) Internal control Detect systematic errors in banking operations Expert opinion (P3) Capital adequacy ratio Ratio of primary capital to risk assets Expert opinion (P4) Independent operating Not one of subsidiaries of financial holding
companies.
Chiou (2009); Hu et. al (2009); Haan and Poghosyan (2012)
Internal business process
(P5) Service items Total numbers of service items Datta and Kundu (2011); Wu (2011) (L1) Responses of customer
service
Numbers of complaints provided by customers about products or services
Sim et al. (2010); Wu (2011) (L2) Professional training Professional certifications or training programs for
employees Ardichvilia and Gasparishvilib (2001); Davis and Albright (2004)
Learning and growth
(L3) Employee stability Turnover of employees Chen (1999); Huang et al. (2011)
C. Comparison of the impact of the 4 perspectives
Note: 0. No impact; 1. Low impact; 2. Medium impact; 3. High impact; 4. Very high impact
D. Comparison of the impact of the 16 determinants
Determi nan ts
Employee stability Professional training Responses of customer service Service items Independent operating Capital adequacy ratio Internal control Transaction efficiency E-banking Cross-selling Market share rate Customer retention Customer satisfaction Non-interest income Interest income Profit marginEmployee stability
Professional training
Responses of customer service
Service items
Independent operating
Capital adequacy ratio
Internal control
Transaction efficiency
E-banking
Cross-selling
Market share rate
Customer retention
Customer satisfaction
Non-interest income
Interest income
Profit margin
Note: 0. No impact; 1. Low impact; 2. Medium impact; 3. High impact; 4. Very high impact
E. Personal Profile
1. Gender: □Male□Female2. Educational background: □University□Master□Ph.D
3. Operation model: □Financial-holding company□Nonfinancial-holding banks 4. Position:
5. Seniority: □Less than 5 years□5～10 years□10～15 years□15～20 years□Over 20 years