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Dynamic Bank Expansion: Spatial Growth, Financial Access, and Inequality

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  • Yan Ji
  • Songyuan Teng
  • Robert M. Townsend

Abstract

We propose a model with local spatial markets and heterogeneous agents to understand and evaluate the geographic expansion of bank branches after banking deregulation in Thailand. The model features heterogeneity in financial frictions across regions, with the costs of accessing credit and deposits depending on the distance from the nearest branch. Disciplined by micro estimates of the effects of branch openings, the model reproduces salient regional and aggregate patterns concerning occupational choice, financial access, and inequality. We apply the model to study two counterfactual financial sector policies in distant markets, one subsidizing branches and the other subsidizing household deposits.

Suggested Citation

  • Yan Ji & Songyuan Teng & Robert M. Townsend, 2023. "Dynamic Bank Expansion: Spatial Growth, Financial Access, and Inequality," Journal of Political Economy, University of Chicago Press, vol. 131(8), pages 2209-2275.
    • Handle: RePEc:ucp:jpolec:doi:10.1086/724112
    DOI: 10.1086/724112
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    Cited by:

    1. Xu, Chenzi & Yang, He, 2024. "Real effects of supplying safe private money," Journal of Financial Economics, Elsevier, vol. 157(C).
    2. Schult, Christoph, 2024. "Is risk the fuel of the business cycle? Financial frictions and oil market disturbances," IWH Discussion Papers 4/2024, Halle Institute for Economic Research (IWH).
    3. Fonseca, Julia & Matray, Adrien, 2024. "Financial inclusion, economic development, and inequality: Evidence from Brazil," Journal of Financial Economics, Elsevier, vol. 156(C).

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