Chunxia Jiang (University of Aderbeen) - The Drivers and Impacts of Bank Business Model Changes: The Global Evidence

Chunxia Jiang (University of Aderbeen) - The Drivers and Impacts of BAnk Business Model Changes: The Global Evidence

Co-authors: Chenchen Zhao (University of Aderbeen)

Abstract:

In this study, we classify the bank business model for a global sample of more than 10,214 banks from 172 countries over the period 1990-2021. We identify four bank business models and find that 57% of banks adopt Retail business model, followed by 26% of Universal business model, 12% of Wholesale business model, and 5% of Trading business model. Retail business model is the most popular one in Asia-pacific and North-America; Wholesale business model is more prevailing in Europe and South-America; and the universal bank business model dominates in Middle-Ease and Africa region. Wholesale banks underperform other bank business models in the 1990s and Retail bank business model became the most profitable one after 2010. We also find that globally 44% of banks have change their business model, however, on average, these banks are associated with lower profitability but higher liquidity. We find the main drivers of bank business model changes include bank regulatory environment, monetary policy, and innovation.

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