Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/175694 
Year of Publication: 
2017
Series/Report no.: 
ECB Working Paper No. 2070
Publisher: 
European Central Bank (ECB), Frankfurt a. M.
Abstract: 
The paper identifies the business models followed by banks in the euro area, utilising a proprietary dataset collected in the context of the supervisory reporting of the Single Supervisory Mechanism. The concept of a 'business model' has been neglected by economic theory and is defined here with respect to the set of activities performed by banks. We adopt a clustering methodology to provide evidence for the existence of distinct business models. Clustering is combined with dimensionality reduction optimally, given the nature of our dataset which features a large number of dimensions for each bank ('fat' data). The method produces a level and a contrast factor which are intuitive in the economic sense. Four business models are identified alongside a set of 'outlier' banks that follow unique business models. The risk and performance indicators of each cluster are examined and evidence is provided that they follow distinct statistical distributions.
Subjects: 
Banking sector
Business models
Cluster analysis
Single Supervisory Mechanism
JEL: 
C63
G21
L21
L25
Persistent Identifier of the first edition: 
ISBN: 
978-92-899-2792-5
Document Type: 
Working Paper

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