Bank Location and Financial Liberalization Reforms: Evidence from Microgeographic Data
AbstractWe examine the effects of bank deregulation on the spatial dynamics of retail-bank branching, exploiting, much like a quasi-natural experiment, the context of intense liberalization reforms in Belgium in the late nineties. Using .ne-grained data on branch network dynamics within the metropolitan area of Antwerp and advancing novel spatial econometric techniques, we show that these liberalization reforms radically shifted and accelerated branch network dynamics. Entry and exit dynamics substantially intensified, the level change in financial void grew significantly, and bank choice markedly declined. Moreover, all these changes consistently extended (even with greater intensity) after the liberalization peak. However, the immediate and longer-term spatial ramifications of the financial sector liberalization were very distinct. All immediate changes systematically, differentially impacted the poorer and wealthier neighborhoods, disenfranchising the poorer neighbourhoods and favoring their wealthier counterparts. The longer-term effects on spatial patterns of change no longer exhibited this systematic relationship with neighborhood income. We draw out the policy implications of our findings.
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Bibliographic InfoPaper provided by Spatial Economics Research Centre, LSE in its series SERC Discussion Papers with number 0058.
Date of creation: Oct 2010
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Web page: http://www.spatialeconomics.ac.uk/SERC/publications/default.asp
Location; Retail-banking; Liberalization; Poverty; Spatial Statistics;
Find related papers by JEL classification:
- G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
- L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
- L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
- O16 - Economic Development, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
- R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-11-20 (All new papers)
- NEP-BAN-2010-11-20 (Banking)
- NEP-GEO-2010-11-20 (Economic Geography)
- NEP-URE-2010-11-20 (Urban & Real Estate Economics)
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