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Move a Little Closer? Information Sharing and the Spatial Clustering of Bank Branches

Author

Listed:
  • Qi, Shusen

    (xiamen university)

  • De Haas, Ralph

    (european bank of reconstruction and development)

  • Ongena, Steven

    (university of zuerich)

  • Straetmans, Stefan

    (Finance)

Abstract

We study how information sharing between banks influences the geographical clustering of branches. We construct a spatial oligopoly model with price competition that explains why bank branches cluster and how the introduction of information sharing impacts clustering. Dynamic data on 59,333 branches operated by 676 banks in 22 countries between 1995 and 2012 allow us to test the hypotheses derived from this model. Consistent with our model, we find that information sharing spurs banks to open branches in localities that are new to them but that are already relatively well served by other banks. Information sharing also allows firms to borrow from more distant banks.

Suggested Citation

  • Qi, Shusen & De Haas, Ralph & Ongena, Steven & Straetmans, Stefan, 2019. "Move a Little Closer? Information Sharing and the Spatial Clustering of Bank Branches," Research Memorandum 006, Maastricht University, Graduate School of Business and Economics (GSBE).
  • Handle: RePEc:unm:umagsb:2019006
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    More about this item

    Keywords

    information sharing; branch clustering;

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • R51 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Finance in Urban and Rural Economies

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