Strategic groups in Polish banking sector and financial stability
AbstractThe paper provides results of research concerning identification of strategic groups in the Polish banking sector and tests of the usefulness of these groups in the assessment of financial stability. The theory of strategic groups predicts the existence of stable groups of companies, stemming from the strategy adopted by them. The theory also predicts that groups differ in performance. Our empirical research, preceded by a review of relevant literature, has been carried out on the basis of a cluster analysis with the use of Ward’s algorithm that optimises allocation of banks into groups. We have identified strategic groups in the Polish banking sector, sustained over time after the year 2000. We have also observed statistically significant differences in performance between banks belonging to different groups, and we have demonstrated further that modelling of profitability within groups with the use of regression yields more precise estimates of parameters than in the case of estimation of a model for the whole sector. Thus, breaking down the whole banking sector into strategic groups creates a possibility to forecast the banking sector earnings in a more precise way, i.e. to provide a more precise ex ante assessment of stability of the financial system.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 326.
Date of creation: 01 Mar 2006
Date of revision:
Strategic groups; financial stability; clustering; Ward algorithm;
Find related papers by JEL classification:
- C49 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Other
- L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
- G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-12-04 (All new papers)
- NEP-BAN-2006-12-04 (Banking)
- NEP-CSE-2006-12-04 (Economics of Strategic Management)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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