The Data Envelopment Analytic Hierarchy Process (DEAHP) Approach in the Evaluation of Commercial Credit Applications

Abstract

In this study, four companies operating in the same sector that had applied for commercial credit from one of the largest private capital banks of Turkey were compared in terms of their performance and the company with the credit application most likely to be satisfied was determined. The Data Envelopment Analytic Hierarchy Process, created by the joint (hybrid) use of the Data Envelopment Analysis and Analytic Hierarchy Process was used in this study. Overall weights were obtained by summing the local weights obtained by Data Envelopment Analysis. Criteria, sub-criteria and weights regarding the alternatives in the hierarchy were calculated according to the Analytic Hierarchy Process and The Data Envelopment Analytic Hierarchy Process methods and the results were similar. According to the findings obtained with both approaches, company ethics and intelligence were determined to be the most important criteria, whereas the company’s sales and marketing structure and sectoral structure were determined to be the least important criteria. On the other hand, according to both the Analytic Hierarchy Process and Data Envelopment Analytic Hierarchy Process approaches, Company 2 was determined to be the most appropriate company whose credit application would be satisfied.

Keywords: Commercial credit application; Credit application evaluation model; Multi Criteria Decision Making; Data Envelopment Analytic Hierarchy Process.