Author(s)

Minghui Fan ¹, Shixing Han ¹

Affiliation(s)

¹ College of Engineering, Tibet University, Lhasa 850000, China

Corresponding Author

Minghui Fan

ABSTRACT

As the trend of global economic integration intensifies, the challenges faced by the financial sector are becoming more and more evident. Many banks are experiencing a surge in non-performing loans and bad debts, leading to bank indebtedness and even bankruptcy, for which it is crucial to evaluate the efficiency and analyze bank failures of banks in other countries so as to avoid losses to our national economy. This paper establishes a mathematical model to evaluate each bank and conducts an in-depth analysis of bank failures. This paper firstly preprocesses the basic data and eliminates the banks with high percentage of missing values. A bank efficiency evaluation model based on principal component analysis and cluster analysis is established, and 13 main indicators are obtained and evaluated for bank efficiency by using gravel diagram, two-dimensional distribution diagram of factor load quadrant and heat map, and then the line connecting the central values of the 13 indicators is used as the dividing line of bank failure efficiency by using cluster analysis.

KEYWORDS

Principal component analysis, Cluster analysis, Gravel plot, Heat map

CITE THIS PAPER

Minghui Fan, Shixing Han, Research on bank efficiency evaluation based on principal component analysis and cluster analysis. Financial Engineering and Risk Management (2022) Vol. 5: 38-46. DOI: http://dx.doi.org/10.23977/ferm.2022.050406.

REFERENCES

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[3] Wu Haiyan, Xu Zhiliang. Study on the origin traceability of Guangdi Long based on principal component analysis and discriminant analysis[J]. Journal of Pharmaceutical Analysis, 2022, 42(03):387-393. 
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