Measuring Bank Performance with Gray Relational Analysis: The Case of Turkey

Abstract

Banking sector is one of the most important factors in development of economy. A strong and healthy banking sector is considered to be a prerequisite for sustainable economic growth. In this study, the aim is to apply Gray Relational Analysis (GRA) to measure and compare financial performances of 10 banks with common stock trading in Istanbul Stock Exchange (ISE) between the years of 2005–2011. Another aim of the study is to reduce the number of financial rates, which determine bank performance, and by doing so, identify which financial rate is more important in measuring performance. As a result of GRA method, “Akbank” was the first and “Yapi Kredi Bank” was the last in terms of financial performance. Another finding of the study was that a bank with high “Return on Assets” could also have a high financial performance.

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