Evaluating Sustainable Performance in China’s Banking Sector Using CPT-TOPSIS

The sustainable development of financial institutions has increasingly captured the attention of both industry stakeholders and investors. This study introduces a novel decision-making framework that integrates Cumulative Prospect Theory (CPT) with the traditional TOPSIS model to evaluate the sustainability performance of commercial banks. Drawing on previous research, we developed a multi-criteria framework that includes five key dimensions—economic, social, environmental, governance, and financial—along with 15 associated indicators. This model was applied to conduct a comprehensive evaluation of five major Chinese commercial banks. Empirical results indicate that our model offers significant advantages over the entropy-weighted TOPSIS model, particularly in uncertain environments. The primary contribution of this study lies in the innovative application of Cumulative Prospect Theory to the sustainability assessment of Chinese commercial banks, coupled with the integration of 15 indicators based on the Global Reporting Initiative (GRI) framework. This approach provides fresh theoretical insights and practical tools for advancing banking performance and sustainability research. Our model bridges the gap between the sustainability assessment practices of large Chinese commercial banks and international standards, offering a promising tool for the analysis and enhancement of bank sustainability strategies.