Recent Trends in the Number and Size of Bank Branches: An Examination of Likely Determinants

35 Pages Posted: 14 Jan 2009

See all articles by Timothy H. Hannan

Timothy H. Hannan

Board of Governors of the Federal Reserve System

Gerald A. Hanweck

George Mason University - Department of Finance

Date Written: January 1, 2008

Abstract

In this paper, we examine the role of market characteristics in explaining the much discussed phenomenon of growth in the number of banking institution branches over time, and the much less discussed phenomenon of decline in the size of the average branch. We note first that substitution of bank branches in the US for thrift branches accounts for much of the sharp rise observed for bank branches over time. Using a panel data set that consists of over 2,000 markets observed from 1988 to 2004, we report a number of findings regarding the market characteristics that are associated with the number of branches (of both commercial banks and savings associations) in a market and the average employment size of those branches.

Keywords: Banks, Branching, Location

JEL Classification: G21, L10, R3

Suggested Citation

Hannan, Timothy and Hanweck, Gerald A., Recent Trends in the Number and Size of Bank Branches: An Examination of Likely Determinants (January 1, 2008). FEDS Working Paper No. 2008-02, Available at SSRN: https://ssrn.com/abstract=1327057 or http://dx.doi.org/10.2139/ssrn.1327057

Timothy Hannan (Contact Author)

Board of Governors of the Federal Reserve System ( email )

20th Street and Constitution Avenue NW
Washington, DC 20551
United States
202-452-2919 (Phone)
202-452-3819 (Fax)

Gerald A. Hanweck

George Mason University - Department of Finance ( email )

Fairfax, VA 22030
United States

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