IDEAS home Printed from https://ideas.repec.org/a/ipf/finteo/v33y2009i2p153-186.html
   My bibliography  Save this article

Strategic Groups and Banks’ Performance

Author

Listed:
  • Grzegorz Halaj

    (National Bank of Poland, Warsaw, Poland)

  • Dawid Zochowski

    (European Central Bank, Frankfurt, Germany)

Abstract

The theory of strategic groups predicts the existence of stable groups of companies that adopt similar business strategies. The theory also predicts that groups will differ in performance and in their reaction to external shocks. We use cluster analysis to identify strategic groups in the Polish banking sector. We find stable groups in the Polish banking sector constituted after the year 2000 following the major privatisation and ownership changes connected with transition to the mostly-privately-owned banking sector in the late 90s. Using panel regression methods we show that the allocation of banks to groups is statistically significant in explaining the profitability of banks. Thus, breaking down the banks into strategic groups and allowing for the different reaction of the groups to external shocks helps in a more accurate explanation of profits of the banking sector as a whole. Therefore, a more precise ex ante assessment of the loss absorption capabilities of banks is possible, which is crucial for an analysis of banking sector stability. However, we did not find evidence of the usefulness of strategic groups in explaining the quality of bank portfolios as measured by irregular loans over total loans, which is a more direct way to assess risks to financial stability.

Suggested Citation

  • Grzegorz Halaj & Dawid Zochowski, 2009. "Strategic Groups and Banks’ Performance," Financial Theory and Practice, Institute of Public Finance, vol. 33(2), pages 153-186.
  • Handle: RePEc:ipf:finteo:v:33:y:2009:i:2:p:153-186
    as

    Download full text from publisher

    File URL: http://www.ijf.hr/eng/FTP/2009/2/halaj.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. Almeida, Rita & Carneiro, Pedro, 2009. "The return to firm investments in human capital," Labour Economics, Elsevier, vol. 16(1), pages 97-106, January.
    2. Peracchi, Franco & Perotti, Valeria & Scarpetta, Stefano, 2007. "Informality and social protection : preliminary results from pilot surveys in Bulgaria and Colombia," Social Protection and Labor Policy and Technical Notes 41541, The World Bank.
    3. Rofman, Rafael & Fajnzylber, Eduardo & Herrera, German, 2008. "Reforming the pension reforms : the recent initiatives and actions on pensions in Argentina and Chile," Social Protection and Labor Policy and Technical Notes 90346, The World Bank.
    4. Amin, Mohammad, 2009. "Labor regulation and employment in India's retail stores," Journal of Comparative Economics, Elsevier, vol. 37(1), pages 47-61, March.
    5. Haja, Nirina Andrianjaka & Milazzo, Annamaria, 2008. "Highly labor-intensive public works in Madagascar : issues and policy options," Social Protection and Labor Policy and Technical Notes 47357, The World Bank.
    6. Braithwaite, Jeanine & Carroll, Richard & Mont, Daniel & Peffley, Karen, 2008. "Disability and development in the World Bank : FY2000-2007," Social Protection and Labor Policy and Technical Notes 45178, The World Bank.
    7. F. Angel-Urdinola, Diego, 2008. "Can the Introduction of a Minimum Wage in FYR Macedonia Decrease the Gender Wage Gap?," Policy Research Working Paper Series 4795, The World Bank.
    8. Almeida, Rita & Aterido, Reyes, 2008. "The incentives to invest in job training : do strict labor codes influence this decision?," Social Protection and Labor Policy and Technical Notes 46189, The World Bank.
    9. Almeida, Rita & Carneiro, Pedro, 2008. "Mandated benefits, employment, and inequality in a dual economy," Social Protection and Labor Policy and Technical Notes 45051, The World Bank.
    10. Milan Vodopivec & Primoz Dolenc:, 2008. "Live Longer, Work Longer: Making It Happen in the Labor Market," Financial Theory and Practice, Institute of Public Finance, vol. 32(1), pages 65-81.
    11. Almeida, Rita & Carneiro, Pedro, 2009. "Enforcement of labor regulation and firm size," Journal of Comparative Economics, Elsevier, pages 28-46.
    12. Milan Vodopivec & Lilijana Madjar & Primoz Dolenc, 2009. "Non-performance of the Severance Pay Program in Slovenia," Financial Theory and Practice, Institute of Public Finance, vol. 33(1), pages 89-102.
    13. Bhattamishra, Ruchira & Barrett, Christopher B., 2010. "Community-Based Risk Management Arrangements: A Review," World Development, Elsevier, vol. 38(7), pages 923-932, July.
    14. Jan C. van Ours & Milan Vodopivec, 2006. "How Shortening the Potential Duration of Unemployment Benefits Affects the Duration of Unemployment: Evidence from a Natural Experiment," Journal of Labor Economics, University of Chicago Press, vol. 24(2), pages 351-378, April.
    15. Braithwaite , Jeanine & Mont , Daniel, 2008. "Disability and poverty : a survey of World Bank poverty assessments and implications," Social Protection and Labor Policy and Technical Notes 42754, The World Bank.
    16. Macours, Karen & Vakis, Renos, 2010. "Seasonal Migration and Early Childhood Development," World Development, Elsevier, vol. 38(6), pages 857-869, June.
    17. John T. Addison & Paulino Teixeira, 2003. "The Economics of Employment Protection," Journal of Labor Research, Transaction Publishers, vol. 24(1), pages 85-129, January.
    18. Vodopivec, Milan & Arunatilake, Nisha, 2008. "Population aging and the labor market : the case of Sri Lanka," Social Protection and Labor Policy and Technical Notes 44927, The World Bank.
    19. Milazzo, Annamaria & Grosh, Margaret, 2008. "Social safety nets in World Bank lending and analytical work : FY2002 - 2007," Social Protection and Labor Policy and Technical Notes 44730, The World Bank.
    20. Reinhard Koman & Ulrich Schuh & Andrea Weber, 2005. "The Austrian Severance Pay Reform: Toward a Funded Pension Pillar," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 32(3), pages 255-274, September.
    21. Milan Vodopivec, 2004. "Income Support for the Unemployed : Issues and Options," World Bank Publications, The World Bank, number 14922.
    22. Barrett , Christopher B & Carter , Michael R & Ikegami , Munenobu, 2008. "Poverty traps and social protection," Social Protection and Labor Policy and Technical Notes 42752, The World Bank.
    23. Robalino, David A. & Zylberstajn, Eduardo & Zylberstajn, Helio & Afonso, Luis Eduardo, 2008. "An ex-ante evaluation of the impact of social insurance policies on labor supply in Brazil : the case for explicit over implicit redistribution," Social Protection and Labor Policy and Technical Notes 90342, The World Bank.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Farnè, Matteo & Vouldis, Angelos, 2017. "Business models of the banks in the euro area," Working Paper Series 2070, European Central Bank.
    2. Jaksa Kristo & Iva Mandac, 2015. "Characteristics of bank financial intermediation in Croatian counties," Financial Theory and Practice, Institute of Public Finance, vol. 39(1), pages 57-82.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ipf:finteo:v:33:y:2009:i:2:p:153-186. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Martina Fabris). General contact details of provider: http://edirc.repec.org/data/ijfffhr.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.