Comparative Characteristics of the Banking Sector in Eastern Europe

Abstract

This article is devoted to the comparative characteristics of the banking sector in Eastern Europe. The paper's central purpose is to summarize data on the functioning and development of the banking sector in Eastern Europe, based on historical background and current state of the banking sector, finding typical features and differences between the banking sectors of Eastern Europe. Methods of statistical analysis and systematization are used in determining the field of research. Methods of economic analysis, particularly the main indicators of banking activity compared to macroeconomic indicators, are used to assess the efficiency of the banking sector. Comparative characteristics of the banking sector are performed using cluster analysis, k-means algorithm. According to the study results, it can be concluded that the countries of Eastern Europe have different backgrounds in the formation of the banking system, which affects the current state of banking. The study collects, sorts, compares, and summarizes data on the number of banking institutions in Eastern Europe, the size of their assets, lending, deposits, equity formation. These indicators are compared with the macroeconomic indicator of GDP, which determines the importance of the banking sector in the real economy. According to the cluster analysis results, it is divided into four groups of common features of the Eastern European country according to some banks' activity indicators. Banks of EU member states are formed mainly by foreign investment, while state funds finance banks of the CIS countries. As a result, banks with foreign investment have more influence on the economy. They support and develop it, while banks with public investment have significantly less effect on the economy, which does not allow it to grow faster.