Financialization of European Union countries - an attempt to determine differentiation through cluster analysis

The process of increasing the importance of the financial sector in the economy is referred to as financialisation. This process can be observed in many sectors of the economy. The article aimed to identify the differentiation in the financialisation of European Union countries. The article verified the research hypothesis according to which the differentiation of EU countries due to financialisation, determined using cluster analysis, consent with the division into groups of countries according to geographical criteria. The k-means cluster analysis method was used to assign countries to individual groups. Six variables were adopted for the research (the ratio of the current level of budget balance to GDP, the ratio of public debt to GDP, the ratio of public expenditure to GDP, the ratio of household debt to GDP, the ratio of household consumption expenditure to GDP, the investment rate of non-financial enterprises). Based on the average values of indicators for the period 2011-2021, EU countries were assigned to characteristic groups differing in the specificity of financialisation. The results indicate that the countries of Central and Eastern Europe were classified into one cluster, while the countries of Southern Europe were classified into two separate clusters. It seems essential to classify the countries of Western Europe and Northern Europe into one cluster. The literature on the subject includes studies of financialisation and its impact on the economy. However, it is difficult to find studies that divide countries according to characteristics related to financialisation.