Move a Little Closer? Information Sharing and the Spatial Clustering of Bank Branches

Shusen Qi, Ralph De Haas, Steven Ongena, Stefan Straetmans

Research output: Working paperProfessional

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Abstract

We study how information sharing between banks influences the geographical clustering of branches. We construct a spatial oligopoly model with price competition that explains why bank branches cluster and how the introduction of information sharing impacts clustering. Dynamic data on 59,333 branches operated by 676 banks in 22 countries between 1995 and 2012 allow us to test the hypotheses derived from this model. Consistent with our model, we find that information sharing spurs banks to open branches in localities that are new to them but that are already relatively well served by other banks. Information sharing also allows firms to borrow from more distant banks.
Original languageEnglish
PublisherMaastricht University, Graduate School of Business and Economics
Number of pages59
Publication statusPublished - 12 Feb 2019

Publication series

SeriesGSBE Research Memoranda
Number006

JEL classifications

  • d43 - Market Structure and Pricing: Oligopoly and Other Forms of Market Imperfection
  • g21 - "Banks; Depository Institutions; Micro Finance Institutions; Mortgages"
  • g28 - Financial Institutions and Services: Government Policy and Regulation
  • l13 - Oligopoly and Other Imperfect Markets
  • r51 - Finance in Urban and Rural Economies

Keywords

  • information sharing
  • branch clustering

Cite this

Qi, S., De Haas, R., Ongena, S., & Straetmans, S. (2019). Move a Little Closer? Information Sharing and the Spatial Clustering of Bank Branches. Maastricht University, Graduate School of Business and Economics. GSBE Research Memoranda, No. 006