A model for valuation of the branch offices of a savings bank based on rough sets

• Published in: Intelligent systems in accounting, finance & management Vol. 12; no. 3; pp. 187 - 213
• Main Authors: Pérez‐Llera, C., Fernández‐Baizán, C., Fanjul, J. L., Feito, J.
• Format: Journal Article
• Language: English
• Published: Chichester, UK John Wiley & Sons, Ltd 01-07-2004; Wiley Periodicals Inc
• Subjects: Accounting; Adaptation; Approximation; Banking industry; Banks; Branch banking; Classification; Competition; Decision making; Discriminant analysis; Information systems; Intelligent systems; Profitability; Savings banks; Specialization; Studies; Valuation; Variables
• ISSN: 1550-1949; 2160-0074
• DOI: 10.1002/isaf.242

This work proposes a model for the valuation of branch offices of banks based on the rough set theory, which could be used as the basis for a decision‐making system for dimensioning strategies of a financial entity. It compares the rough set approach with the competitive discriminant analysis methodology using a common set of data from 421 branches. We pay special attention to data reduction and the creation of decision rules that will allow future branches to be classified. These rules could constitute the basis for the evaluation of the viability of dimensioning strategies for a financial entity. In order to evaluate the predictive capabilities of the decision rules, we present the results of cross‐validation tests to evaluate the ability of the model to classify new branches. It appears that the rough sets approach provides a favourable tool for the valuation of branch offices. Copyright © 2004 John Wiley & Sons, Ltd.