Impact of the COVID-19 crisis on the Portuguese banking system. Linear ordering method

Abstract

The goal of this paper is to assess the resilience of Portuguese banks to the potential impact of the COVID-19 pandemic. For this purpose, diagnostic variables of 19 banks were selected and prioritized using linear ordering methods. This methodology allowed us to perform rankings of banks using six linear ordering methods and taking into account two weighting procedures and two variants of the diagnostic feature. The study was also supplemented by a sensitivity analysis and an optimization procedure aimed at identifying the optimal linear ordering method. The main results obtained show that the resilience of Portuguese banks is not evenly distributed among individual banks. These findings could be used by regulators to plan support measures for the most fragile banks.