Empirical model of bank life cycle

Abstract

In the article the model of the bank life cycle was proposed, which is composed of the following stages: creation, extensive growth, intensive growth, maturity, decline and liquidation. The methodical approach for identification the bank life cycle stage according to its specific as a financial institution was developed. It consists in substantiation of indicators for identifying life cycle stages (the growth rate of market share, the income growth rate, the growth rate of personnel expenses) and in distribution Ukrainian banks by life cycle stages according to determined indicators using the method of cluster analysis. In addition, this approach provides the construction of classification functions that allows defining life cycle stage. This creates the basis for formation of the bank development strategic directions and for the selection the appropriate financial management technologies. Implementation of the methodical approach has allowed to determine the life cycle stages of Ukrainian banks.