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Branch banking dynamics, collective behaviour and overclustering

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  • Alberto Russo

    () (Polytechnic University of Marche)

Abstract

We provide an empirical and theoretical analysis of branch banking dynamics in Italy, focussing on banks' location choices in the decentralised system emerged after the deregulation of late 1980s and early 1990s. Until the regime change the Italian banking sector was characterised by a centralised system in which the opening of new branches was subject to a Bank of Italy''s authorisation. As a consequence of the 1990 "branch liberalisation" there was a collective phenomenon of new openings that, in some circumstances, has produced overclustering episodes, due to the lack of coordination in an uncertain decisional context. Different performances at the system level can be linked to different aggregation of errors in alternative organisational settings. We suggest that policy intervention may improve information gathering and diffusion at the system level, reducing the incidence of locational errors.

Suggested Citation

  • Alberto Russo, 2009. "Branch banking dynamics, collective behaviour and overclustering," Economics Bulletin, AccessEcon, vol. 29(2), pages 928-943.
  • Handle: RePEc:ebl:ecbull:eb-08g20001
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    File URL: http://www.accessecon.com/Pubs/EB/2009/Volume29/EB-09-V29-I2-P42.pdf
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    References listed on IDEAS

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    1. Sah, Raaj Kumar & Stiglitz, Joseph E, 1986. "The Architecture of Economic Systems: Hierarchies and Polyarchies," American Economic Review, American Economic Association, vol. 76(4), pages 716-727, September.
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    Cited by:

    1. Alberto Russo, 2009. "On the evolution of the Italian bank branch distribution," Economics Bulletin, AccessEcon, vol. 29(3), pages 2063-2078.

    More about this item

    JEL classification:

    • G2 - Financial Economics - - Financial Institutions and Services
    • C8 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs

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