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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).

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  • 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).
    3. Palmieri, Egidio & Ferilli, Greta Benedetta & Altunbas, Yener & Stefanelli, Valeria & Geretto, Enrico Fioravante, 2024. "Business model and ESG pillars: The impacts on banking default risk," International Review of Financial Analysis, Elsevier, vol. 91(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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