HHI-based evaluation of the European banking sector using an integrated fuzzy approach

Abstract

Purpose: This paper aims to evaluate the market concentration and competition in the European Banking Sector using an integrated multi-criteria decision-making approach under the fuzzy environment. Design/methodology/approach: The hybrid model combining fuzzy decision-making trial and evaluation laboratory (DEMATEL), fuzzy analytic network process (ANP) and fuzzy VIKOR methods is applied to measure the market competition and concentration in the European Banking Sector. For this purpose, two academicians and one expert from banking sector with at least five-year experiences are selected to evaluate the dimensions, criteria and alternatives. The academicians are also appointed to define the decision-making problem and determine the dimensions and the criteria on the basis of related literature. The implementation of the model has been constructed in three main phases. The first phase consists of the fuzzy DEMATEL technique for understanding the impact-relation map among the dimensions. The second phase includes the fuzzy ANP method for measuring the relative importance of the criteria. The last phase comprises the fuzzy VIKOR approach to rank the alternatives with the values of the Herfindahl–Hirschman Index (HHI). Findings: Turkey, France, England and Germany are placed in the competitive market structure of the European Banking Sector respectively. Additionally, the comparative results of the study confirm the market shares and the competitive policies of the European and Turkish Banking Sector. Originality/value: The novelty of the paper is to construct a hybrid multi-criteria decision-making model with the proposed HHI scales under the fuzzy environment and defined competition dimensions and criteria based on the literature for the European Banking Industry.