A hybrid second-order cone programming and multi-criteria decision-making method for cost-benefit analysis in global banking
Yazdi A.K. Tan Y. Araújo de Medeiros A.M. Wanke P.F. Roubaud D. Galariotis E.
1 September 2025Elsevier Ltd
Expert Systems with Applications
2025#288
This research introduces a novel hybrid approach that combines second-order cone programming (SOCP) and multi-criteria decision-making (MCDM) to conduct a cost-benefit analysis (CBA) of global banks. Benefits correspond to the positive criteria in the banking industry, such as loans, securities, and different sources of income. On the other hand, fixed assets, deposits, personnel and interest expenses are the costs to be minimized. The approach makes it possible to measure banking performance precisely by managing massive datasets effectively and accomplishing better decision-making with complex constraints. The empirical evidence revealed that endogenous variables (fluctuations in the cost of capital, labor, loans, and securities) have a significant effect on CBA scores, while exogenous variables such as foreign direct investment abroad (FDI), economic growth (GDP growth), and political stability have minimal effects. This study provides theoretical and practical implications by demonstrating that cost management, particularly regarding operational inputs such as labor and capital expenses, is critical for enhancing bank performance. Regulatory quality, rather than external macroeconomic conditions, emerged as a dominant influence, with China offering a benchmark for effective practices. These insights can guide the refinement of cost-benefit evaluation models and inform the design of policies aimed at strengthening international banking resilience.
Banking , Cost-benefit analysis , Financial optimization , MCDM , SOCP
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Departamento de Ingeniería Industrial y de Sistemas, Facultad de Ingeniería, Universidad de Tarapacá, Arica, 10000, Chile
School of Management, University of Bradford, West Yorkshire, Bradford, BD7 1DP, United Kingdom
EBAPE, Fundação Getúlio Vargas, Edifício Roberto Campos - R. Jorn. Orlando Dantas, 30 Botafogo, RJ, Rio de Janeiro, 22231-010, Brazil
Montpellier Business School, 2300 Av. des Moulins, Montpellier, 34080, France
Gulf Financial Center, Gulf University for Science and Technology, Hawally, Kuwait
Bang College of Business, KIMEP University, 4 Abay Avenue, Almaty, 050010, Kazakhstan
Departamento de Ingeniería Industrial y de Sistemas
School of Management
EBAPE
Montpellier Business School
Gulf Financial Center
Bang College of Business
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