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Euro area banking sector integration: using hierarchical cluster analysis techniques

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  • Kok, Christoffer
  • Puigvert Gutiérrez, Josep Maria

Abstract

In this study we apply cluster analysis techniques, including a novel smoothing method, to detect some basic patterns and trends in the euro area banking sector in terms of the degree of homogeneity of countries. We find that in the period 1998-2004 the banking sectors in the euro area countries seem to have become somewhat more homogeneous, although the results are not unequivocal and considerable differences remain, leaving scope for further integration. In terms of clustering, the Western and Central European countries (like Germany, France, Belgium, and to some extent also the Netherlands, Austria and Italy) tend to cluster together, while Spain and Portugal and more recently also Greece usually are in the same distinct cluster. Ireland and Finland form separate clusters, but overall tend to be closer to the Western and Central European cluster. JEL Classification: C49, F36, G21

Suggested Citation

  • Kok, Christoffer & Puigvert Gutiérrez, Josep Maria, 2006. "Euro area banking sector integration: using hierarchical cluster analysis techniques," Working Paper Series 627, European Central Bank.
    • Handle: RePEc:ecb:ecbwps:2006627
    Note: 508948
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    References listed on IDEAS

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    Cited by:

    1. Paul Evans & Iftekhar Hasan & Ana Lozano-Vivas, 2008. "Deregulation and Convergence of Banking: The EU Experience," Finnish Economic Papers, Finnish Economic Association, vol. 21(2), pages 104-117, Autumn.
    2. Puigvert Gutiérrez, Josep Maria & Fortiana Gregori, Josep, 2008. "Clustering techniques applied to outlier detection of financial market series using a moving window filtering algorithm," Working Paper Series 948, European Central Bank.
    3. Francesca Arnaboldi & Peter Claeys, 2008. "Internet Banking in Europe: a comparative analysis," IREA Working Papers 200811, University of Barcelona, Research Institute of Applied Economics, revised Sep 2008.
    4. Christiaan Pattipeilohy, 2016. "A comparative analysis of developments in central bank balance sheet composition," DNB Working Papers 510, Netherlands Central Bank, Research Department.
    5. Stephen G. Cecchetti & Marion Kohler & Christian Upper, 2009. "Financial crises and economic activity," Proceedings - Economic Policy Symposium - Jackson Hole, Federal Reserve Bank of Kansas City, pages 89-135.
    6. Ekaterina Dorodnykh, 2013. "What Drives Stock Exchange Integration?," International Journal of Business and Economic Sciences Applied Research (IJBESAR), International Hellenic University (IHU), Kavala Campus, Greece (formerly Eastern Macedonia and Thrace Institute of Technology - EMaTTech), vol. 6(2), pages 47-79, September.
    7. Ekaterina Dorodnykh, 2014. "Determinants of stock exchange integration: evidence in worldwide perspective," Journal of Economic Studies, Emerald Group Publishing, vol. 41(2), pages 292 - 316, March.
    8. Sofía Orazi & Lisana Belén Martinez & Hernán P. Vigier, 2019. "La inclusión financiera en América Latina y Europa," Ensayos de Economía 18301, Universidad Nacional de Colombia Sede Medellín.
    9. Cândida Ferreira, 2011. "European integration and banking efficiency: a panel cost frontier approach," Working Papers Department of Economics 2011/04, ISEG - Lisbon School of Economics and Management, Department of Economics, Universidade de Lisboa.
    10. Joanna Dreger & Aimé Heene, 2013. "European Integration and Europeanisation: Benefits and Disadvantages for Business," Bruges European Economic Policy Briefings 29, European Economic Studies Department, College of Europe.
    11. Anton, Sorin Gabriel & Avadanei, Andreea, 2010. "The implications of European retail banking integration on small and medium-sized enterprises financing. An overview," MPRA Paper 28660, University Library of Munich, Germany.
    12. Nicolae Dardac & Teodora Cristina Barbu & Iustina Alina Boitan, 2011. "Impact of Credit Restructuring on the Quality of Bank Asset Portfolio. A Cluster Analysis Approach," Acta Universitatis Danubius. OEconomica, Danubius University of Galati, issue 3(3), pages 162-173, June.
    13. Buljan, Ante & Spremić, Mario, 2019. "Cluster Analysis of IT Security Risks in Chosen Sectors," Proceedings of the ENTRENOVA - ENTerprise REsearch InNOVAtion Conference (2019), Rovinj, Croatia, in: Proceedings of the ENTRENOVA - ENTerprise REsearch InNOVAtion Conference, Rovinj, Croatia, 12-14 September 2019, pages 563-570, IRENET - Society for Advancing Innovation and Research in Economy, Zagreb.
    14. Mamatzakis, E & Koutsomanoli, A, 2009. "European Banking Integration under a Quadratic Loss Function," MPRA Paper 19379, University Library of Munich, Germany.

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    More about this item

    Keywords

    banking sector; cluster analysis; financial integration;
    All these keywords.

    JEL classification:

    • C49 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Other
    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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