A Spatial Panel Model of Bank Branches in Canada

Chen, Heng; Strathearn, Matthew

doi:10.1108/s0731-905320200000042012

Cited by 8 publications

(15 citation statements)

References 1 publication

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“…Huysentruyt et al (2012) explore the determinants of the patterns of bank presence in the neighbourhoods of Antwerp between 1991 and 2006. Their empirical results show that, in addition to market structure conditions, the socio-economic environment also has a high influence on branching decisions; these outcomes are confirmed by several recent papers (among others Qi et al, 2019;Sengupta and Dice, 2019;Chen & Strathearn, 2020;Stix, 2020) Argent and Rolley (2000), Felici andPagnini (2008), Okehalam (2009), Cohen and Mazzeo (2010), Alamà and Tortosa-Ausina (2012), Huysentruyt et al (2013) and Alamà et al (2015) argue and demonstrate that the number of inhabitants is a factor influencing attractiveness for bank branches. However, analysing Portuguese bank branching decisions between 1988 and 1996, Barreto and Badenfuller (2006) find that banks also imitate their legitimacy-based groups towards unattractive locations, producing a negative effect on profitability.…”

Section: Literature Reviewsupporting

confidence: 53%

Determinants of Bank Branch Presence in Local Areas: A Comparison Between North and South of Italy

Barbieri¹,

Borroni²,

Lippi³

et al. 2021

IJEF

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A close relationship with customers, mainly achieved through the opening of local branches, has long been a fundamental key to competitive advantage in the banking sector. Financial innovation, changes in customer behavior and competitive dynamics have transformed this relationship over time, leading to the closure of numerous branches. This work explores the determinants of branch evolution in an advanced and notoriously bank-centric country (Italy) using NUTS 3 panel data over the 2000-2016 time-span. Results show how - in general - demographic, industrial and economic variables explain the dynamics of banks’ branch location strategy. However, more heterogeneous evidence emerges when North and South Italy are taken into consideration separately suggesting that territorial and regional dimension might play a role even in the banking sector.

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Section: Literature Reviewsupporting

confidence: 53%

Determinants of Bank Branch Presence in Local Areas: A Comparison Between North and South of Italy

Barbieri¹,

Borroni²,

Lippi³

et al. 2021

IJEF

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“…Amel and Liang, 1997;Zhang et al, 2021), population density (e.g. Okeahalam, 2009;Chen and Strathearn, 2020), income level (e.g. Feinberg, 2009;Chen and Strathearn, 2020), economic structure (e.g.…”

Section: Literature On Bank Branchingmentioning

confidence: 99%

Determinants of branching decisions of State-controlled commercial banks: evidence from China

Sun

Liu

2023

IJBM

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PurposeBranching is one of the crucial strategic non-price actions for banks. Previous studies on the impact of state ownership upon banks focus on bank lending behavior. This paper aims to offer a novel investigation of how state ownership affects bank branching behavior by examining state-controlled commercial banks (SCCBs) in the context of the largest developing and transitional country China.Design/methodology/approachThe two-part model (TPM) is applied to analyze the branching decision process. In the first stage, the dependent variable is the choice of bank branching dynamics and in the second stage the dependent variable is the number of new branches or the number of closed branches. For robustness check, the ordered probit selection model allowing for interdependence of the two stage decisions is also employed.FindingsUsing a unique dataset of bank branches in China, this paper finds that the branching decisions of Chinese SCCBs are driven by both profit motivated factors including population size, population density, income level, financial development and banking competition and politically motivated factors as represented with the proportion of SOEs. As a comparison, branching decisions of joint-stock banks in China are fully determined by profit motivated factors.Originality/valueFirst, this study is the first to explore the effect of state ownership on bank branching decisions, providing a new insight on the literature regarding to the impact of state ownership on bank decisions. Second, this study explores the potential effect of politically motivated factors on bank branching decisions, filling the gap in bank branching literature. Third, this study can contribute to bank branching literature by enriching the limited understanding of how SCCBs make branching decisions. Lastly, this study applies novel empirical strategies to analyze bank branching decisions, including the TPM and the ordered probit selection model.

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“…Conceptually, spatial mapping can reduce the risk of banking competition as a result of asymmetric information due to the significant physical distances between banks and customers (Agarwal & Hauswald, 2010;Ansong et al, 2015). Therefore, proximity to customers makes it easier for banks to source valid information for effective operation in mitigating financing risk (H. Chen & Strathearn, 2020;Ergungor & Moulton, 2011;Flögel, 2016;Verma, 2011). In addition, the facility associated with geographical proximity can also foster increasing customer trust, thereby indirectly improving Deposits (Benamati & Serva, 2007;Liberti & Petersen, 2019;Richards et al, 2008).…”

Section: Literature Reviewmentioning

confidence: 99%

“…L. Chen et al, 2020;Danon et al, 2020;Eggo et al, 2011;Gatto et al, 2020;Gog et al, 2014;Guo, 2007;Ludovic et al, 2020). Studies in several countries, such as Canada, Kuwait, and the USA, have developed a spatial finance approach as an indicator in measuring the effect of geography in financial and banking performance since individual regions possess varying capabilities in receiving and responding to external and internal influences (H. Chen & Strathearn, 2020). As an archipelago nation consisting of 34 administrative provinces with 17,504 islands (Fauzan et al, 2020;Grydehøj & Hayward, 2014;Mahendradhata et al, 2017;Mufraini et al, 2020), Indonesia judiciously adopts the spatial approach to provide the most accurate information on financial interactions between regions.…”

Section: Introductionmentioning

confidence: 99%

“…As an archipelago nation consisting of 34 administrative provinces with 17,504 islands (Fauzan et al, 2020;Grydehøj & Hayward, 2014;Mahendradhata et al, 2017;Mufraini et al, 2020), Indonesia judiciously adopts the spatial approach to provide the most accurate information on financial interactions between regions. Such information would best assist the government in identifying and formulating the right policies for postpandemic economic recovery for the financial sector (H. Chen & Strathearn, 2020;Patterson et al, 2020;H. Zhang, 2014).…”

Section: Introductionmentioning

confidence: 99%

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Islamic Bank Deposits during COVID-19 Pandemic: A Spatial Finance Approach

2022

JEM

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This study aims to determine factors affecting deposits in banks during COVID-19 pandemic by employing a spatial finance approach on a sample of Islamic Rural Banks in the Indonesian archipelago. The results showed that the COVID-19 pandemic, capital financing, and bank asset had a spatial influence on bank deposits. Specifically, while COVID-19 pandemic reduces bank deposits, capital financing and bank assets increase these. Using Spatial Lag Model and Local Indicator of Spatial Autocorrelation through Spatial Rate Analysis, the study further found that there is a potential spillover effect in certain provinces based on the bank deposit relationship with COVID-19, financing and bank assets. This implies that the three factors tend to spatially affect the socio-economic activities of the neighboring areas of certain provinces. This study may shed some light for the government in determining post-COVID-19 economic recovery policies using a geographical approach in providing information on financial interactions between regions.

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A Spatial Panel Model of Bank Branches in Canada

Cited by 8 publications

References 1 publication

Determinants of Bank Branch Presence in Local Areas: A Comparison Between North and South of Italy

Determinants of Bank Branch Presence in Local Areas: A Comparison Between North and South of Italy

Determinants of branching decisions of State-controlled commercial banks: evidence from China

Islamic Bank Deposits during COVID-19 Pandemic: A Spatial Finance Approach

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