THE PROBLEMS OF ESTIMATION OF THE BANK’S TOP MANAGEMENT STRATEGIC DECISIONS EFFICIENCY

Abstract

Some problems of assessing the effectiveness managerial decisions of the highest (strategic) level executives in the banking business have been considered. In the commercial practice, it is common to compare the results (especially financial ones) of the entire organization. However, the final results are often influenced by a large number of external factors which often are not directly related to the competence of strategic level managers. This circumstance determines the relevance and scientific issues of the study. The methodological toolkit (Modified coefficient of Alpha-Jansen’s) for assessing the results for personnel of the strategic level of management in commercial organizations that do not belong to the corporate entity has been proposed. The financial reports of the banking sector of Ukraine and PJSC “MEGABANK” for 2013-2017 years was the empirical basis for the model approbation. Solving the scientific problem of data systematization (financial results of banking institutions), required the economicstatistical method and the method of empirical data systematization. Economicmathematical methods have been used to develop and prove the model for evaluating the effectiveness of top-management decisions. The expected quarterly return on equity and return on assets of the PJSC "MEGABANK" were targeted, which are targeted at the top-level management. By comparing the expected figures with the actual results of the current quarter, the alpha-Jensen coefficient has been got, which indicates the effectiveness for the strategic decisions of the top management If the alpha-Jensen coefficient is negative, the highest management of the bank, in this particularly market situation, has not achieved its goals. Conversely, the positive value of the coefficient indicates the effectiveness of the existing strategy and the management decisions taken by the top-management. Expected returns are expected to be based on ROA and ROE. The components for calculating the expected profitability are: average weighted profitability of the entire banking system; modified systemic risk factor (beta) – regression between the profitability of the investigated bank and the weighted average profitability of the entire banking system; risk-free rate of return. The algorithm for assessment of the effectiveness of managerial decisions at the strategic level bank management has the following sequential stages: 1) calculation of profitability for the banking system and for the investigated bank; 2) determination of the modified β-factor of the investigated bank on the basis of correlation-regression analysis; 3) determining and calculation of risk-free return; 4) calculation of the expected return of the investigated bank and assessing of the effectiveness for the management decisions. It has been considered that quantitative multidimensional models are more precise to assess the competencies of human resources, since they are more formalized and convenient for comparing and analyzing the dynamics of its indicators.