A fuzzy AHP and DEA approach for making bank loan decisions for small and medium enterprises in Taiwan

Due to the competition among financial institutions has become fiercer in Taiwan now, each bank not only provides varied service, but also attracts consumers with low price by all means. However, the derivative problem may unable to be handled by the bank - the problem in high ratio of overdue loaning. According to the statistics by small and medium enterprises office in economic department, over 90% of Taiwan enterprises are small and medium with its financing share reaching 30% of the overall enterprise loaning. It has significant influence on banks' saving and loaning business. Therefore, this article researches on small and medium enterprises, by using Fuzzy Analytic Hierarchy Process (FAHP) to choose the important index in loaning evaluation, establish one complete and efficient loaning decision-making module with its weights and Data Envelopment Analysis (DEA), and make effective protection against high ratio of overdue loaning. A practical case study demonstrates the effectiveness of the proposed methodology. (C) 2010 Elsevier Ltd. All rights reserved.