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

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 our model. We find that information sharing spurs banks to open branches in localities that are new to them, but that are already well served by other banks. Information sharing also allows firms to borrow from more distant banks.
Original languageEnglish
PublisherEuropean Bank of Reconstruction and Development
Pages1-51
Number of pages51
Publication statusPublished - 2018

Publication series

SeriesEBRD working paper series
Number223

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

  • Branch clustering, information sharing, spatial oligopoly model

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