Askoldas Podviezko

THE EVALUATION OF FINANCIAL STABILITY AND SOUNDNESS OF LITHUANIAN BANKS

Abstract The successful development of economy is based on effective and stable performance of commercial banks. The evaluation of stability and soundness of banks is a complex task, involving a considerable number of multidimensional criteria. It is an idiosyncratic task because of a complicated internal business structure of banks, intertwined cash flows and strong influence of market conditions on soundness levels. In this paper, soundness and stability dynamics of commercial banks registered in Lithuania was evaluated by using several multiple criteria methods from simpler ones to the more sophisticated PROMETHEE method. The results obtained indicate that the levels of soundness and stability of banks operating in the developing Lithuanian market of commercial banks noticeably fluctuate. A comparison of the obtained results reveals the causes of the fluctuations. A simultaneous use of different multiple criteria methods for evaluating the soundness and stability of commercial banks increases the robustness of the evaluation.

Augmenting Multicriteria Decision Aid Methods by Graphical and Analytical Reporting Tools

Evaluation of the level of soundness and stability of commercial banks is an idiosyncratic task, since banks have a complicated internal business structure, intertwined cash flows and strong influence of market conditions on their soundness levels. Using several methods of multicriteria decision aid (MCDA) SAW, PROMETHEE II, TOPSIS and COPRAS in this paper to make the evaluation provided clear and intelligible evaluation in the form of rankings. Te result made in this format is designed to make rough comparisons of commercial banks. Nevertheless, more detailed evaluation must employ additional proprietary tools promptly exposing numerous specific data in a clear form. Reporting tools, simplifying thorough analysis of financial data, which exposes bank performance, are proposed in this paper. They help a decision-maker (depositor, bank management or a comptroller) to instantly observe both strength and weakness of commercial banks by categories of its performance criteria (capital, assets, management, earnings and liquidity) and dynamics of performance of a bank.

Development of a methodology of evaluation of financial stability of commercial banks

The field of evaluation of financial stability of commercial banks, which emanates from persistent existence of financial crisis, induces interest of researchers for over a century. The span of prevailing methodologies stretches from over-simplified risk-return approaches to ones comprising large number of economic variables on the micro- and/or macro-economic level. Methodologies of rating agencies and current methodologies reviewed and applied by the ECB are not intended for reducing information asymmetry in the market of commercial banks. In the paper it is shown that the Lithuanian financial system is bank-based with deposits of households being its primary sources, and its stability is primarily depending on behavior of depositors. A methodology of evaluation of commercial banks with features of decreasing information asymmetry in the market of commercial banks is being developed by comparing different MCDA methods.

Comparative analysis of tax capacity in regions of Russia

Influence of tax policy of the state and its regions is vital for country’s economy; it is the major source of allocation of expenditure obligations of tax capacity on the sub-federal level. The pu...

Assessing multiple criteria for rapid bus routes in the public transport system in Vilnius

The paper considers the technological development of rapid bus routes in the network of Vilnius public transport. All rapid bus routes of the scheme for Vilnius public transport are presented and analysed with reference to the selected system of criteria. This article describes the situation of the public transport system in Vilnius and shows the influence of rapid bus routes. The paper also analyses parameters for the lines used for the multiple attribute ranking of rapid bus routes in Vilnius city. Multi-criteria methods have been chosen to rank six rapid bus routes and to estimate the best and most effective alternative based on the preferred technological and financial data. The experts of different decision-making groups have analyzed the importance of parameters selected for assessing alternatives to ranking rapid bus routes. The experts on the transport system have been invited to determine the relative weights of the defined criteria. Three techniques, including analytical hierarchical process, simple additive weighting and TOPSIS methods have been used and compared to determine the most efficient rapid bus route based on economic and technological parameters. To rank alternatives and to make a comparison of the obtained calculation results, three multi-criteria methods have been applied in this research.

Type of the Lithuanian Financial System

Abstract Interest in determining type of the financial system and investigation of its influences emerged in the end of sixties, when Goldsmith raised a hypothesis, that structure of financial system has influence on growth. Later the scope of investigation widened and now along with growth topic includes influence of the type of financial system on financial stability, culture, juridical system of a country. Fostering financial stability is a complex process, which scope is wider than applying solely monetary and fiscal policies in a country. In this respect particular attention should be paid to financial stability of monetary financial institutions, as well as reputation and competence of their management. Type of financial system, namely bank-based and market-based, determines major financial institutions, stability of which is crucial for a countrys financial system. Type of countrys financial system must be determined to equip financial supervisors with more efficient decision-making tools. Quantitative criteria of the type of financial system is proposed in this paper. Type of Lithuanian financial system is determined based on proposed criteria and on comparative analysis with developed countries, which have established types of financial system.

Scientific Applications of the AHP Method in Transport Problems

In methodologies of solving different transport problems where the best decision has to be determined usually a number of chosen quantitative criteria are incorporated, which describe qualitative parameters of transport systems in quantitative terms. Often weights which reveal importance of such criteria must be evaluated. The realm of proprietary methods used in engineering sampling and experimental studies does not comprise methods of weight evaluation. Consequently, expert evaluation methods, which elicit weights of criteria from experienced, qualified and fair experts, are used. Among the most popular such methods is the method AHP (Analytic Hierarchy Process). Scientists of Vilnius Gediminas Technical University used this method for investigation of interrelationship of elements of a transport system; for evaluation of influence of the interrelationship on road traffic safety; and for evaluation of quality of passenger railway transportation service.