Clustering Austrian Banks’ Business Models and Peer Groups in the European Banking Sector

79 The European banking sector is currently undergoing rapid changes due to recent financial market developments and the introduction of new legislation, such as the Capital Requirements Regulation/Capital Requirements Directive IV. This study aims to identify emerging patterns of these changes in the European banking sector via clustering analysis. There is a broad stream of literature analyzing the efficiency of banks. Tortosa-Ausina (2002), for instance, focuses on cost efficiency and calculates product mix clusters. Several authors analyze the in uence of the recent nancial crisis on banks’ business models. Altunbas et al. (2011) focus on bank risk and use probit and linear regressions. Ayadi et al. (2011) perform a screening analysis of business models in European banking using clustering methods. Their sample consists of 26 European banks, and they use end-of-year data. Ayadi et al. (2012) extend their previous paper by using a larger sample and focusing on the impact of new regulatory measures. This study builds on the existing literature and is based on a very large sample of European banks. We provide a detailed motivation for the selection of variables and validate the robustness of the statistical methodology used. The paper is structured as follows: Section 1 describes the statistical methodology used for identifying banks’ busiReferee d by: Kurt Hornik, Vienna University of Economics and Business Clustering Austrian Banks’ Business Models and Peer Groups in the European Banking Sector