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

64 Pages Posted: 9 Jan 2018 Last revised: 28 Jun 2023

See all articles by Shusen Qi

Shusen Qi

Xiamen University - School of Management

Ralph De Haas

European Bank for Reconstruction and Development; Centre for Economic Policy Research (CEPR); KU Leuven

Steven Ongena

University of Zurich - Department Finance; Swiss Finance Institute; KU Leuven; NTNU Business School; Centre for Economic Policy Research (CEPR)

Stefan Straetmans

Maastricht University ; University of Antwerp - Faculty of Applied Economics

Tamas Vadasz

KU Leuven - Faculty of Business and Economics (FEB)

Multiple version iconThere are 4 versions of this paper

Date Written: April 24, 2019

Abstract

We present a model of credit market competition to derive key hypotheses about how information sharing between banks influences the spatial clustering of their branches. We then test these hypotheses using data on 56,555 branches owned by 614 banks across 19 countries. We find that information sharing incentivizes banks to establish branches in localities that are new to them but that are already served by other banks. The resultant branch clustering is associated with reduced spatial credit rationing, as information sharing enables firms to access credit from more distant banks. These findings underscore how information sharing makes it more important for banks to move closer to each other rather than closer to their borrowers.

Keywords: Information sharing, branch clustering, spatial bank competition

JEL Classification: D43, G21, G28, L13, R51

Suggested Citation

Qi, Shusen and De Haas, Ralph and Ongena, Steven R. G. and Straetmans, Stefan and Vadasz, Tamas, Move a Little Closer? Information Sharing and the Spatial Clustering of Bank Branches (April 24, 2019). Swiss Finance Institute Research Paper No. 17-74, Available at SSRN: https://ssrn.com/abstract=3099119 or http://dx.doi.org/10.2139/ssrn.3099119

Shusen Qi (Contact Author)

Xiamen University - School of Management ( email )

No.422 Siming South Road
Xiamen, Fujian 361005
China

Ralph De Haas

European Bank for Reconstruction and Development ( email )

One Exchange Square
London, EC2A 2JN
United Kingdom

HOME PAGE: www.ebrd.com

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

KU Leuven

Naamsestraat 69
Leuven, B-3000
Belgium

Steven R. G. Ongena

University of Zurich - Department Finance ( email )

Schönberggasse 1
Zürich, 8001
Switzerland

Swiss Finance Institute

c/o University of Geneva
40, Bd du Pont-d'Arve
CH-1211 Geneva 4
Switzerland

KU Leuven ( email )

Oude Markt 13
Leuven, Vlaams-Brabant 3000
Belgium

NTNU Business School ( email )

Norway

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Stefan Straetmans

Maastricht University ( email )

Tongersestraat 53
Maastricht, 6200 MD
Netherlands

HOME PAGE: http://www.stefanstraetmans.com

University of Antwerp - Faculty of Applied Economics ( email )

Prinsstraat 13
Antwerp, B-2000
Belgium

Tamas Vadasz

KU Leuven - Faculty of Business and Economics (FEB) ( email )

Naamsestraat 69
Leuven, B-3000
Belgium

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