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Location and geographic diversification patterns of Spanish financial institutions: Implications for growth, 1989-2009


  • Emili Tortosa-Ausina


  • David Conesa
  • Luisa Alamá


Over the last twenty years, the Spanish banking industry has been deeply reshaped in several respects. One of the features that has allowed for it has been the geographic expansion of most savings banks, which could not enter other markets different from their natural market before 1989. Since then, they have been expanding geographically into other regions (different from their regions of origin) at a remarkable pace. Almost simultaneously, except for the hiatus of the 1993 crisis, the Spanish economy has grown at remarkable annual rates, a growth pattern which has stopped suddenly in 2008. Under these circumstances, this paper has several goals. The first one consists of exploring which the geographic diversification patterns of Spanish financial institutions have been during 1989-2009. This goal extends previous analyses in two main ways: (i) we include not only commercial and savings banks but also credit unions, which are very important in rural communities affected by financial exclusion; (ii) we evaluate location patterns from a spatial statistics perspective, whose importance in regional science has been demonstrated, but have not been considered for analyzing financial institutions' location patterns. Once these patterns are determined, the second main goal of the paper consists of analyzing the links between these patterns' and firms' performance, in terms of efficiency and productivity. Finally, there is a large body of literature analyzing the links between financial development and growth from a country or even regional perspective. In this article, the database we use enables the possibility of extending this goal to the municipal case. This is important, since there are some Spanish provinces such as Madrid with population above 6 million whose comparison with other much smaller provinces (whose population is well below 100,000 inhabitants) is rather uninformative. Results indicate: (i) the location and diversification patterns vary mostly across firms and by type of firm; (ii) it is difficult to establish a linear relationship between banks' performance and geographic diversification; (iii) the evaluation of growth and financial development at municipal level indicates that some communities have experienced financial exclusion.

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  • Emili Tortosa-Ausina & David Conesa & Luisa Alamá, 2011. "Location and geographic diversification patterns of Spanish financial institutions: Implications for growth, 1989-2009," ERSA conference papers ersa10p1162, European Regional Science Association.
  • Handle: RePEc:wiw:wiwrsa:ersa10p1162

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    References listed on IDEAS

    1. María Hierro & Adolfo Maza, 2010. "Per capita income convergence and internal migration in Spain: Are foreign-born migrants playing an important role?," Papers in Regional Science, Wiley Blackwell, vol. 89(1), pages 89-107, March.
    2. Glaeser, Edward L & Hedi D. Kallal & Jose A. Scheinkman & Andrei Shleifer, 1992. "Growth in Cities," Journal of Political Economy, University of Chicago Press, vol. 100(6), pages 1126-1152, December.
      • Edward L. Glaeser & Hedi D. Kallal & Jose A. Scheinkman & Andrei Shleifer, 1991. "Growth in Cities," NBER Working Papers 3787, National Bureau of Economic Research, Inc.
      • Glaeser, Edward Ludwig & Kallal, Hedi D. & Scheinkman, Jose A. & Shleifer, Andrei, 1992. "Growth in Cities," Scholarly Articles 3451309, Harvard University Department of Economics.
    3. Cristina Bernad & Lucio Fuentelsaz & Jaime Gómez, 2008. "Deregulation and its Long-Run Effects on the Availability of Banking Services in Low-Income Communities," Environment and Planning A, , vol. 40(7), pages 1681-1696, July.
    4. Rebeca Juan, 2008. "Competition in Local Markets: Some Evidence from the Spanish Retail Banking Market," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 32(2), pages 145-162, March.
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    6. Henderson, Vernon, 1997. "Externalities and Industrial Development," Journal of Urban Economics, Elsevier, vol. 42(3), pages 449-470, November.
    7. Manuel Illueca & José Pastor & Emili Tortosa-Ausina, 2009. "The effects of geographic expansion on the productivity of Spanish savings banks," Journal of Productivity Analysis, Springer, vol. 32(2), pages 119-143, October.
    8. Lucio Fuentelsaz & Jaime Gómez, "undated". "Multipoint Competition, Mutual Forbearance and Entry into Geographic Markets," Studies on the Spanish Economy 127, FEDEA.
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