Cluster Analysis of the EU Countries during the Covid-19 Period (2019–2021)

This study investigates structural shifts in European Union countries banking system typologies during the COVID-19 period from 2019 to 2021. Using the k-means clustering method (compared with hierarchical agglomerative clustering and Gaussian mixture models) on 10 financial and macroeconomic indicators (e.g., non-performing loans, z-score, GDP growth) at the country level for 25 European Union countries, we identified four distinct clusters with stable typological definitions but evolving country compositions. Comparison of cluster profiles reveals the pandemic period as a structural catalyst, reinforcing the resilience of Nordic Resilience Systems) and Core Stability Systems clusters. Significant compositional shifts occurred: Dynamic Growth Systems absorbed advanced economies, balancing growth and stability, while High Intermediation Systems transformed into a vulnerable typology, marked by high fiscal risk and low stability buffers. These findings highlight structural shifts associated with the pandemic period and differentiated policy responses, and inform regulatory strategies for enhancing EU banking resilience.