Data driven decision analysis in bank financial management with goal programming model

Abstract

Financial management is important to the companies such as banks and financial institutions in managing the assets and liabilities. In optimizing the financial management, different goals have to be achieved simultaneously such as asset accumulation, liability reduction, equity, earning, profitability and total goal achievement. Therefore, goal programming model is introduced to solve the multiple objectives decision making problem in financial management. The objective of this study is to develop a goal programming model to optimize and compare the financial management of the banks in Malaysia based on the benchmark target value for each goal. In this study, six goals such as total assets, total liability, equity, profitability, earnings and total goal achievements are investigated for the period from year 2012 until 2016. The results of this study show that all banks are able to achieve the goal for total asset and equity. Moreover, the target value of equity can be increased further for all banks in future. This study is significant because it helps to determine the potential improvement on total liability, profit, earnings and total goal achievement for each bank in order to achieve the benchmark target value for future development.