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Cluster analysis of bank business models: The connection with performance, efficiency and risk

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  • Lagasio, Valentina
  • Quaranta, Anna Grazia

Abstract

We ran a worldwide investigation of the business models of 1,237 banks during 2011–2017 by applying a cluster analysis including ratios from both sides of the balance sheet of the bank and income statement. Then, via a connection analysis, we analysed whether there is a link between the adoption of a specific business model and size, profitability, efficiency and risk profile. We found that a bank business model is based on different endogenous factors (bank financial statements items and operating strategy) and can be linked to exogenous factors (financial crises, policies of central banks).

Suggested Citation

  • Lagasio, Valentina & Quaranta, Anna Grazia, 2022. "Cluster analysis of bank business models: The connection with performance, efficiency and risk," Finance Research Letters, Elsevier, vol. 47(PA).
    • Handle: RePEc:eee:finlet:v:47:y:2022:i:pa:s1544612321005754
    DOI: 10.1016/j.frl.2021.102640
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    References listed on IDEAS

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    Cited by:

    1. Bolívar, Fernando & Duran, Miguel A. & Lozano-Vivas, Ana, 2023. "Bank business models, size, and profitability," Finance Research Letters, Elsevier, vol. 53(C).
    2. Bolívar, Fernando & Duran, Miguel A. & Lozano-Vivas, Ana, 2023. "Business model contributions to bank profit performance: A machine learning approach," Research in International Business and Finance, Elsevier, vol. 64(C).

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    More about this item

    Keywords

    Banks; Business model; Cluster analysis; Profitability; Risk;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms

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