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Profitability And Bank De-Branching In The Digital Age: Evidence From Russian Regions

Author

Listed:
  • Evgenii Zimin

    (National Research University Higher School of Economics)

  • Maria Semenova

    (National Research University Higher School of Economics)

Abstract

Bank de-branching is one of the key trends in banking sectors all over the world. This paper explores the conditions in which de-branching brings more profits to the bank. This issue is attracting considerable interest due to recent technological developments and increasing competition, including from fintech companies. Using the data from 84 Russian regions over the period of 2010–2020, we test whether the adoption of internet technologies and financial digital literacy (FDL) are positively related to bank de-branching and whether they add to bank de-branching efficiency in terms of bank profitability. We show that a higher degree of adoption of technological innovation and higher levels of FDL are positively related to bank de-branching. Furthermore, we observe that banks closing their branches in regions exhibiting higher levels of internet development and FDL gain more profits from de-branching. The results are robust to various model specifications

Suggested Citation

  • Evgenii Zimin & Maria Semenova, 2022. "Profitability And Bank De-Branching In The Digital Age: Evidence From Russian Regions," HSE Working papers WP BRP 90/FE/2022, National Research University Higher School of Economics.
    • Handle: RePEc:hig:wpaper:90/fe/2022
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    More about this item

    Keywords

    De-branching; Banks; Bank Profitability; Financial digital literacy; Innovations; Russia; Regions;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G01 - Financial Economics - - General - - - Financial Crises
    • P2 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies

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