Analysis of Quest and Chaid Methods

Oct 13, 2025 by windailys.com 75 views

Introduction

The performance of conventional commercial banks is a crucial aspect of the banking industry, as it directly affects the stability and health of the economy. Evaluating bank performance involves analyzing various parameters, including risk profile, good corporate governance, income, and capital. The purpose of this analysis is to provide a comprehensive understanding of bank performance to various stakeholders, such as customers, shareholders, and regulators. This analysis is essential for supporting investment decision-making, supervising the banking sector, and maintaining public confidence in the banking industry.

Background

The indicators used in the Risk Governance, Efficiency, and Capital (RGEC) analysis include capital adequacy ratios (CAR), Return on Assets (ROA), Net Interest Margin (NIM), Non-Performing Loan (NPL), Loan to Deposit Ratio (LDR), operational costs for operational income (BOPO), NPL level, ROA level, and bank ranking according to the Indonesia Securities Rating Institution (PEFINDO). These indicators provide valuable insights into the financial health and stability of banks.

Methodology

In this comparative analysis, two decision tree methods are used: Quest (Quick, Unbased, Efficient, and Statistical Tree) and Chaid (Chi-Squared Automatic Interaction Detection). The Quest method produces a binary classification tree, while the Chaid method produces a non-binary classification tree. The results of this analysis will provide a comprehensive understanding of the performance of conventional commercial banks.

Analysis of Quest and Chaid Methods

Advantages of the Quest Method

The Quest method is known for its ability to produce fast and efficient decision trees. This is because the algorithm used in this method can overcome the problem of bias in the selection of attributes. As a result, Quest tends to provide more accurate results in identifying the patterns contained in the data. In the context of bank performance, indicators produced such as BOPO and ROA can provide a clear picture of the operational efficiency and profitability of the bank.

Key Benefits of Quest Method:

Fast and efficient decision trees
Overcomes bias in attribute selection
Provides accurate results in identifying patterns in data
Offers a clear picture of operational efficiency and profitability

Strengths of the Chaid Method

Meanwhile, the Chaid method is superior in handling data that has many categories. This method uses chi-squared testing to determine the interaction between variables, thus providing deeper information about how certain factors are interconnected. By producing indicators such as LDR and NPLs, Chaid can help in the analysis of bank credit and credit risks.

Key Benefits of Chaid Method:

Handles data with many categories effectively
Provides deeper information about the interaction between variables
Offers insights into bank credit and credit risks
Helps in the analysis of bank performance

Comparison and Implications

The ratio of the results of the two methods shows that although there are several indicators that are the same, each method has a different focus in analyzing bank performance. The use of confusion matrix to analyze the prediction results of the two methods also provides valuable insights on each accuracy and effectiveness in determining bank performance.

Comparison of Quest and Chaid Methods:

Both methods produce different indicators
Each method has a different focus in analyzing bank performance
Confusion matrix analysis provides valuable insights on accuracy and effectiveness

Conclusion

The conclusion of this analysis is that the two methods, Quest and Chaid, have advantages and disadvantages of each in assessing the performance of conventional commercial banks. Therefore, the combination of the two methods can be an effective strategy to provide a more comprehensive picture of the health of the bank. The selection of the right method depends on the purpose of the analysis and characteristics of available data, so that the decisions taken can further support the development of policies that are beneficial for all related parties in the banking industry.

Recommendations:

Combine Quest and Chaid methods for a more comprehensive analysis
Select the right method based on the purpose of the analysis and data characteristics
Use confusion matrix analysis to evaluate the accuracy and effectiveness of each method

Future Research Directions

Future research directions can focus on exploring the application of other decision tree methods, such as Random Forest and Support Vector Machines, in assessing bank performance. Additionally, the use of machine learning techniques, such as neural networks, can provide more accurate and robust results. Furthermore, the analysis of bank performance can be extended to include other factors, such as environmental and social responsibility, to provide a more comprehensive understanding of bank performance.

Future Research Directions:

Explore the application of other decision tree methods
Use machine learning techniques to improve accuracy and robustness
Analyze bank performance including environmental and social responsibility factors

Introduction

In our previous article, we discussed the analysis of comparative Quest and Chaid decision tree methods in assessing conventional commercial bank performance. In this article, we will provide a Q&A section to address some of the common questions and concerns related to this topic.

Q&A

Q: What are the main differences between Quest and Chaid decision tree methods?

A: The main differences between Quest and Chaid decision tree methods are:

Binary vs. Non-Binary Classification: Quest produces a binary classification tree, while Chaid produces a non-binary classification tree.
Handling Data with Many Categories: Chaid is superior in handling data with many categories, while Quest is more effective in handling data with fewer categories.
Algorithm Used: Quest uses a different algorithm than Chaid, which affects the accuracy and efficiency of the decision tree.

Q: What are the advantages of using Quest decision tree method?

A: The advantages of using Quest decision tree method are:

Fast and Efficient Decision Trees: Quest produces fast and efficient decision trees, which makes it suitable for large datasets.
Overcomes Bias in Attribute Selection: Quest can overcome the problem of bias in attribute selection, which makes it more accurate in identifying patterns in data.
Provides Clear Picture of Operational Efficiency and Profitability: Quest provides a clear picture of operational efficiency and profitability, which is essential for bank performance analysis.

Q: What are the advantages of using Chaid decision tree method?

A: The advantages of using Chaid decision tree method are:

Handles Data with Many Categories Effectively: Chaid is superior in handling data with many categories, which makes it suitable for complex datasets.
Provides Deeper Information about Interaction between Variables: Chaid provides deeper information about the interaction between variables, which is essential for bank performance analysis.
Offers Insights into Bank Credit and Credit Risks: Chaid offers insights into bank credit and credit risks, which is essential for bank performance analysis.

Q: How can I select the right decision tree method for my bank performance analysis?

A: To select the right decision tree method for your bank performance analysis, you should consider the following factors:

Purpose of Analysis: Determine the purpose of your analysis, such as identifying operational efficiency or credit risks.
Data Characteristics: Consider the characteristics of your data, such as the number of categories and the complexity of the dataset.
Accuracy and Efficiency: Evaluate the accuracy and efficiency of each decision tree method based on your data and analysis goals.

Q: Can I use both Quest and Chaid decision tree methods together?

A: Yes, you can use both Quest and Chaid decision tree methods together to provide a more comprehensive analysis of bank performance. This approach is known as a hybrid approach, which combines the strengths of both methods.

Hybrid Approach:

Use Quest to identify operational efficiency and profitability.
Use Chaid to identify credit risks and bank performance.

Conclusion

In conclusion, the analysis of comparative Quest and Chaid decision tree methods in assessing conventional commercial bank performance is a complex topic that requires careful consideration of various factors. By understanding the advantages and disadvantages of each method, you can select the right decision tree method for your bank performance analysis and provide a more comprehensive understanding of bank performance.

Recommendations:

Use Quest for operational efficiency and profitability analysis.
Use Chaid for credit risks and bank performance analysis.
Consider a hybrid approach to combine the strengths of both methods.