  To examine the relation between profitability and business models (BMs)
across bank sizes, the paper proposes a research strategy based on machine
learning techniques. This strategy allows for analyzing whether size and profit
performance underlie BM heterogeneity, with BM identification being based on
how the components of the bank portfolio contribute to profitability. The
empirical exercise focuses on the European Union banking system. Our results
suggest that banks with analogous levels of performance and different sizes
share strategic features. Additionally, high capital ratios seem compatible
with high profitability if banks, relative to their size peers, adopt a
standard retail BM.
