Transformations  in
Business & Economics

The Hierarchy of Bank Strategies in Transition Economies: A Case Study of the Slovenian Banking Sector
Aljoša Feldin, Marko Košak, Janez Prašnikar, Matevž Rašković, Vesna Žabkar

ABSTRACT. In this paper different business and competitive strategies in the Slovenian banking sector are investigated. As opposed to other transition economies in CEE, the Slovenian banking sector’s ownership structure has been characterised by the prevalent domestic ownership and significant involvement of the government in the two largest banks in the country. As a result one would expect to observe significant differences in individual banks’ strategies. Contrary to our expectations, the majority of banks in the Slovenian banking market pursue the same competitive strategy. They operate as universal banks implementing high growth strategies focused almost exclusively on expanding their market share in the domestic market. We model differences in the quality of services between banks and show that only those banks which invest in competitiveness-promoting activities can develop strategies that are viable in the long run. By using the most recent survey data we analyse the currently implemented bank strategies and suggest possible readjustments of these strategies.

KEYWORDS: banking sector, strategies, transition economies, Slovenia.

JEL classification: G21, G34, L10, P2.