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Terán-Bustamante, Antonia
What Drives Profit Income in Mexico’s Main Banks? Evidence Using Machine Learning
Innovation and technological management model in the tequila sector in Mexico
2023
,
González-Rossano, Carlos
,
Terán-Bustamante, Antonia
,
Velázquez-Salazar, Marisol
,
Martínez Velasco, Antonieta Teodora
Historically, the banking system has been critical to the development of economies by addressing funds efficiently—from customer savings and investors to the productive activities of people and companies, financing consumer goods and current expenses, housing, infrastructure projects and providing liquidity to the market. However, it must be transformed to respond to emerging demands in society for better financial products and services with a positive impact on living conditions and well-being. To achieve this, banks must create economic value—that is to say, banks should create profits in a sustained manner—in order to also create social value and thus generate shared value. The purpose of this study was twofold. The first aim was to identify the main factors that contributed to the majority of Mexican banking profits in the period from 2003 to 2021; the second aim of the study was to provide an innovative metric of banking performance. Using supervised machine learning algorithms and Principal Component Analysis, two prediction models were tested, and two banking performance indices were defined. The findings show that Random Forest is a reliable profit prediction model with a lower mean absolute error between the predicted yearly profit and losses and the actual data. There are no significant ranking position differences between the two performance indices. The first performance index obtained is novel due to its simplicity, since it is built on the basis of five values associated with commercial banking activity. In Mexico, no similar studies have been published. The indicator most widely used by regulators worldwide is the CAMELS index, which is a weighted average of the capital adequacy level, asset quality, management capacity, profitability, liquidity, and sensitivity to market risk. Its scale of 1 to 5 is useful for identifying the robustness and solvency of a bank, but not necessarily its capacity to generate profits. This approach might encourage banks to remain aware of their potential to create shared value and to develop competitive strategies to increase benefits for stakeholders. © 2023 by the authors.
2022
,
Terán-Bustamante, Antonia
,
Martínez Velasco, Antonieta Teodora
,
Castillo-Girón, Víctor Manuel
,
Ayala-Ramírez, Suhey
Creativity, ideas, and an entrepreneurial attitude are needed to innovate. However, it is also necessary to have practical instruments that allow innovations to be reflected in the company. One of those tools is technology. This research aims to analyze innovation and technology in the tequila industry through Bayesian networks with machine learning techniques. Likewise, an innovation and technology management model will be developed to make better decisions, which will allow the company to innovate to generate competitive advantages in a mature low-tech industry. A model is made in which the critical factors that influence management innovation and technology optimally to generate value translate into competitive advantages. The evidence shows that the optimal or non-optimal management of knowledge management and its various factors, through the causality of the variables, allow the interrelation to be more adequately captured to manage it. The results show that the most relevant factors for adequate management of innovation and technology are knowledge management, sales and marketing, organizational and technological architecture, national and international markets, cultivation of raw materials, agave, and management, use of waste, and not research and development. © 2022 by the authors. Licensee MDPI, Basel, Switzerland.