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The demise of branch banking – Technology, consolidation, bank fragility

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  • Keil, Jan
  • Ongena, Steven

Abstract

We study bank branching dynamics across 3,143 US counties and 26 years. During the last decade, banks closed their branches at an unprecedented rate. At its peak in 2009, there were 90,783 branches. By 2020, this number has fallen by 12 percent. While technological factors correlate with these branching dynamics, bank fragility and consolidation are also strongly associated with changes in the number of branches (and their openings and closures). Interestingly, technological capabilities to service customers, such as online banking, seem less tightly linked to de-branching than technological capabilities to process internal information. Our analysis shows that large banks rely on internal technology to shed branches, while small banks close branches when they are vulnerable or consolidate.

Suggested Citation

  • Keil, Jan & Ongena, Steven, 2024. "The demise of branch banking – Technology, consolidation, bank fragility," Journal of Banking & Finance, Elsevier, vol. 158(C).
    • Handle: RePEc:eee:jbfina:v:158:y:2024:i:c:s0378426623002297
    DOI: 10.1016/j.jbankfin.2023.107038
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    More about this item

    Keywords

    Branches; Banking; Technology; Bank health; Mergers and acquisitions;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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