Characteristics of bank financial intermediation in Croatian counties

Research on bank financial intermediation in a country’s narrower territorial units is scarce, in both domestic and international literature. Banks are almost the only financial intermediaries in narrower territorial units and their role is substantial, ranging from participating in regional development to the successful running of their own business. Hence, the main objective of this paper is to examine the characteristics of the financial intermediation of banks in the counties of the Republic of Croatia, both through a comparison between their economic development levels and the general presence of financial intermediation, and a more specific analysis of their deposit and credit policies. The article uses hierarchical and non-hierarchical (k-means) cluster analyses to identify relatively homogeneous groups of counties based on sets of indicators of: economic environment, financial development and infrastructure and, at a more detailed level, the deposit and credit policies of banks. The research results suggest heterogeneity and diversity of bank policies across the counties and sets of indicators. Differences have been observed between developed and developing counties, as well as in approaches to banks’ deposit and credit policies. The paper’s findings encourage further research into these issues.