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Bank Business Model Migrations in Europe: Determinants and Effects

Ayadi, R., Bongini, P., Casu, B. ORCID: 0000-0003-3586-328X and Cucinelli, D. (2020). Bank Business Model Migrations in Europe: Determinants and Effects. British Journal of Management, doi: 10.1111/1467-8551.12437

Abstract

In response to the post-crisis regulatory reforms, the European banking sector has undergone significant changes that have led banks to reconsider their strategies, structures, and operations. Based on a sample of over 3,000 banks from 32 European countries during the period 2010-2017, we identify banks' business models based on cluster analysis and track their evolution. We then apply a logistic regression and find that banks with higher risk and lower profitability are more likely to change their business model. Employing a propensity score matching approach, we investigate the effect of migration on bank performance and find that changing the business model affects banks positively, i.e., migrating banks increase their profitability, stability, and cost-efficiency. The effect of migration differs depending on the target business model. When switches are a consequence of being acquired or motivated by regulatory compliance, the positive impact remains.

Publication Type: Article
Publisher Keywords: banks; business models; banking strategy; propensity score matching
Subjects: H Social Sciences > HF Commerce
H Social Sciences > HG Finance
J Political Science > JN Political institutions (Europe)
Departments: Business School > Finance
Date available in CRO: 21 Sep 2020 10:00
Date deposited: 21 September 2020
Date of acceptance: 17 September 2020
Date of first online publication: 2 November 2020
URI: https://openaccess.city.ac.uk/id/eprint/24936
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