THE CONSTRUCTION OF A TYPOLOGY OF BRANCH BANKS ON THE BASIS OF CLUSTER ANALYSIS AND NEURAL NETWORKS

Topic. The article analyzes Russia’s banking system, which is a complex, multi-layered, hierarchically organized system in which there exist different stable groups of banks. It is stated the strengthening role of multi-branch  banks. We analyze the existing approaches to the selection of the group of multi-branch banks. There is lack of uniformity in the definition of ‘multi-branch bank’ and existence of different interpretation among researchers, legislators, and regulators as concerns the characteristics and quality of group multi-branch banks.

Purpose. The purpose of this paper is the construction of a typology of banks with branches in the Russian Federation according to the number of branches and allocation in the banking system of the group multidivisional banks.

Methodology. Based on the clustering of banks that have branches and representative offices (Ward’s method, distance metric — a Euclidean distance), we constructed the typology of banks according to a number of their branches and departments. Further, we tested a dedicated group of multi-branch banks for its substantial stability using different methods of clustering and neural networks.

Results. In the study, we propose a list of parameters for the implementation of clustering procedures of Russian banks that have branches and representative offices. As parameters of the clustering, we consider all statutory allowed internal and external units of banks. We implemented verification of a typology of banks by the neural network with the teacher: if the proposed typology is not true, the network will not be trained, or it will make errors corresponding to the ‘fallout’ from the classification. The result of the implementation of the neural network confirmed the presence in the banking system of the Russian Federation groups of banks classified on the basis of cluster analysis.

Conclusions. Received typology of branches of banks has confirmed the hypothesis about the existence in the banking system of the Federation group of multi-branch banks. It has been actually determined this group of banks and given its mathematical description in accordance with the average number of structural units. The results of the study can be used for further study of the properties inherent in different types of banks with branches and offices, including multi-branch banks, and for analysis of the mechanism of their functioning that could serve as a basis of increase of efficiency of banking activities in the Russian Federation.

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