Strategic groups: their influence on the performance of the Venezuelan banking industry and its relationship with the geographic coverage

The objective of this research was to determine the strategic groups Venezuelan banking industry are their influence on performance and its relationship to geographic coverage, throughout the first half of 2008. This period was selected for two reasons: 1) This semester was characterized, in Latin America as being a period of economic stability before the global financial crisis and 2) The General Law of Banks and Other Financial Institutions requires banks to publish their financial statements each semester. The sample consisted of 52 financial institutions. The data required to carry out this research was obtained from the balance sheets and income statements published by ASOBANCA. Before application of cluster analysis to the 8 variables that integrate the scope of the strategy, we conducted a principal components analysis to determine the relationship between these variables and to detect outliers, while distinguishing the strategies that characterized the group following the common procedure used by Amel and Rhoades proposed ( 1988), and was reinforced by the realization of parametric statistical and non-parametric tests. The use of these tests was to identify novel strategies followed by strategic groups in banking and allow, in contrast to commonly used methods to verify the existence of statistically different groups as well as homogeneous groups who develop a common strategy. To determine the performance differences between strategc groups regarding financial and economic performance variables, we applied the contrasts of ANOVA and Kruskal-Wallis. We used SPSS for tabulation of data and to apply the analysis and the tests described above while evaluating the geographical coverage of banking and demonstrate the link between it and the strategic groups using the software Geographic Information System ArcGIS. Finally, we used the Spearman test to analyze the coverage of strategic groups in the less poor municipalities and those considered most attractive for investment. The results were as follows: 1) Banks employ different patterns of strategic behavior. 2) The combined strategic group behavior patterns. This paper identified five strategic groups: conservative banking, commercial banking, retail banking, corporate and public small corporate banking. 3) The different strategies adopted by banks were not expressed in a differentiation in levels of economic and financial results. 4) The banking groups a strategy of geographic coverage relating to their financial strategy. Thus the conservative bank concentrates its offices in the municipalities that are less risky and more profitable. The commercial banks locate 81.82% of its offices in those cities where the bank generally gives the largest volume of loans to microentrepreneurs. Retail banking has the largest network of offices. Corporate public bank networks includes offices moderate some of the less poor municipalities, but also situated in the poorest municipalities, which shows greater social responsibility, consistent with the mission of public enterprises. Small corporate banking, located in Chacao, close to most of the bank headquarters that make up the other strategic groups, make it easy for their strategy of placing their funds in the por tfolio, which includes lending to other financial institutions.