A decision support model for location selection: Bank branch case

Abstract

Branch location selection is one of the most important and strategic decision making processes requiring to asses carefully several criteria based on the mission and strategy. The study aims to provide a decision support model in order to help bank managers evaluate and select the most appropriate location for a bank branch on the basis of a case study in a banking institution in Turkey. The objective of the bank is to select the most appropriate city for opening a branch among the six alternatives in the Eastern part of Turkey. Because of the multi-criteria nature of the problem and the fuzziness in the comparisons of the criteria and the alternatives, Fuzzy Analytic Hierarchy Process was used to address the problem of location selection in the study. The model was consisted of five main criteria -"demographic", "socio-economic", "banking indicators", " sectoral distribution of employment ", and "regional trade potential"-and seventeen sub-criteria representing utmost attention of management based on the bank's vision, mission, and strategy.

Multi-Objective Location Problem for Bank Branches

“…In [20] authors employed a decision support system (DSS) model to help decision-makers in the banking industry to select the most promising banking location in the Amman area. Next, in [21] authors choose the most appropriate city to open a branch in Turkey, through a Hierarchical Analytical Decision Process (AHP) model. In the same way in [22] authors used it to locate branches around the country in Turkey.…”

Technological branch investments in physical branching strategies of small and medium scale banks

“…In the study conducted by Willer (1990); the working population, income distribution and individual / business potential are effective in determining the branch locations of banks. In the research by Cinar (2009) and Cebi and Zeren (2008), the demographic (urban, population growth rate), socio economic (gross national product per capita, literacy rate, rate of population with higher education, average household size, employee rate, employer rate), sectoral employment (agricultural employment rate, manufacturing employment rate, construction employment rate, services employment rate), banking (number of bank, number of branch, bank deposit per branch, credit per branch, bank deposit per capita, credit per capita) and trade potential (number of firms, number of organized industrial zone) data types are used to determine the correct branch location for banks. The study acknowledges that banking, demographic, trade potential, and socio-economic data types stand out in terms of importance, while sectoral employment data are less important.…”