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Alternative financial service providers and the spatial void hypothesis

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  • Smith, Tony E.
  • Smith, Marvin M.
  • Wackes, John
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    Abstract

    This paper studies the spatial relationship between traditional banking services (Banks) and alternative financial service providers (AFSPs). The main objective is to test the so-called spatial void hypothesis that AFSPs tend to locate in markets where traditional banking services are under-provided. The key question of interest here is whether or not AFSPs serve markets with significantly lower income levels than those of Banks. One of the main contributions of this paper is to develop a statistical methodology for addressing this question that builds on previous studies. The present approach is based largely on K-function analyses of both individual and paired point patterns. These Monte Carlo testing procedures are applied to Banks and AFSPs in the four-county region around Philadelphia, Pennsylvania, and are also compared with previous methods. In contrast to previous work, the key finding of the present research is that there is indeed strong empirical support for the spatial void hypothesis in this Philadelphia region.

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    File URL: http://www.sciencedirect.com/science/article/B6V89-4RSBXT9-1/1/d6fa32e9500fb28c19b9441ab9955d5a
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    Bibliographic Info

    Article provided by Elsevier in its journal Regional Science and Urban Economics.

    Volume (Year): 38 (2008)
    Issue (Month): 3 (May)
    Pages: 205-227

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    Handle: RePEc:eee:regeco:v:38:y:2008:i:3:p:205-227

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    Web page: http://www.elsevier.com/locate/regec

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    References

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    1. Burkey, Mark L. & Simkins, Scott P., 2004. "Factors Affecting the Location of Payday Lending and Traditional Banking Services in North Carolina," The Review of Regional Studies, Southern Regional Science Association, vol. 34(2), pages 191-205.
    2. Kulldorff, Martin, 2006. "Tests of Spatial Randomness Adjusted for an Inhomogeneity: A General Framework," Journal of the American Statistical Association, American Statistical Association, vol. 101, pages 1289-1305, September.
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    Cited by:
    1. Marieke Huysentruyt & Eva Lefevere & Carlo Menon, 2010. "Bank location and financial liberalization reforms: evidence from microgeographic data," LSE Research Online Documents on Economics 33551, London School of Economics and Political Science, LSE Library.
    2. Murizah Osman Salleh & Aziz Jaafar & M. Shahid Ebrahim, 2012. "Can an interest-free credit facility be more efficient than a usurious payday loan?," Working Papers 12008, Bangor Business School, Prifysgol Bangor University (Cymru / Wales).

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