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How Does Bank Branch Supply Spur Rural Income Growth? Evidence From Counties In China

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  • YIPENG WANG

    (College of Finance and Statistics, Hunan University, Changsha, P. R. ChinaBusiness School, The University of Edinburgh Edinburgh, UK2Business School, The University of Edinburgh, Edinburgh, UK)

  • YAXIONG ZHAO

    (College of Economics and Management Fujian Agriculture and Forestry University Fuzhou, P. R. China)

  • LIQIONG LIN

    (College of Finance and Statistics, Hunan University Changsha, P. R. China)

Abstract

In this paper, we investigate how bank branch supply affects rural income growth by analyzing a panel dataset of 1,542 counties in China between 2006 and 2019. We discover that enhancing bank branch supply fosters rural income growth through financial utilization and economic growth, and the process is also negatively moderated by rural financial utilization and economic levels. We then prove the inverted U-shaped relationship between bank branch supply and rural income growth, indicating that the marginal effect of bank branch supply increases at the earlier stage where rural bank branch supply lags behind the bank branch demand in boosting regional economic growth, and decreases at the later stage where the rural bank branch supply has exceeded the “optimal point†of bank branch supply. Further, bank branch expansion is more efficient than FinTech development in accelerating rural income growth, particularly in impoverished counties. The findings imply the necessity of enhancing bank branch supply in rural areas, especially in underdeveloped rural areas, to accelerate rural income growth.

Suggested Citation

  • Yipeng Wang & Yaxiong Zhao & Liqiong Lin, 2025. "How Does Bank Branch Supply Spur Rural Income Growth? Evidence From Counties In China," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 70(05), pages 1357-1392, September.
    • Handle: RePEc:wsi:serxxx:v:70:y:2025:i:05:n:s0217590823500352
    DOI: 10.1142/S0217590823500352
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    Keywords

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    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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