Financial Exclusion and Branch Closures After the Great Recession

23 Pages Posted: 9 Sep 2016 Last revised: 20 Jan 2017

Alfredo Martín‐Oliver

University of the Balearic Islands

Date Written: December 30, 2016


This paper analyzes the causes and consequences of closures of bank branches in terms of spatial accessibility after a negative shock in the demand for bank services, and whether closures concentrate in less-favored regions. We posit a theoretical framework to analyze markets with partial and total financial exclusion and derive testable empirical implications. Using data of the locations of Spanish bank branches before and after the bank restructuring (2007-2014), we find that the crisis has reduced the spatial accessibility to financial services, it has been heterogeneous across regions and it has been more acute in small municipalities, which might become banking deserts. The results show that the closures of branches respond to two factors. On the one hand, the general decrease in the demand for banking products. On the other hand, the larger reduction of the branch network of cajas compared to banks. Bailed-out cajas were forced to reduce their productive capacity to receive capital injections. As well as this, cajas were acting like microfinance banks in Spain and their transformation into profit-maximizing banks implied the closing of those branches that were providing services in low-income areas.

Keywords: branch, bank restructuring, financial exclusion, distance, Spanish cajas

JEL Classification: G21,R30

Suggested Citation

Martín‐Oliver, Alfredo, Financial Exclusion and Branch Closures After the Great Recession (December 30, 2016). Available at SSRN: or

Alfredo Martin-Oliver (Contact Author)

University of the Balearic Islands ( email )

Crtra. Valldemossa, km 7.5
Ed. Jovellanos
Palma de Mallorca, Illles Balears 07122

Register to support our free research


Paper statistics

Abstract Views