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

55 Pages Posted: 27 Nov 2018 Last revised: 26 Mar 2020

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); Tilburg University - Department of Finance

Steven Ongena

University of Zurich - Department of Banking and Finance; Swiss Finance Institute; KU Leuven; Centre for Economic Policy Research (CEPR)

Stefan Straetmans

Maastricht University ; University of Antwerp - Faculty of Applied Economics

Multiple version iconThere are 4 versions of this paper

Date Written: March 25, 2020

Abstract

We study how information sharing between banks influences the geographical clustering of branches. A spatial oligopoly model first explains why branches cluster and how information sharing impacts price competition and equilibrium clustering. With data on 59,333 branches of 676 banks in 22 countries between 1995 and 2012, we test key model hypotheses. We find that information sharing increases branch clustering as banks open branches in localities that are new to them but that are already served by other banks. This branch clustering is associated with less spatial credit rationing as information sharing allows firms to borrow from more distant banks.

Keywords: Branch clustering, information sharing, spatial oligopoly model

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

Suggested Citation

Qi, Shusen and De Haas, Ralph and Ongena, Steven R. G. and Straetmans, Stefan, Move a Little Closer? Information Sharing and the Spatial Clustering of Bank Branches (March 25, 2020). EBRD Working Paper No. 223, Available at SSRN: https://ssrn.com/abstract=3291522 or http://dx.doi.org/10.2139/ssrn.3291522

Shusen Qi

Xiamen University - School of Management ( email )

No.422 Siming South Road
Xiamen, Fujian 361005
China

Ralph De Haas (Contact Author)

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

Tilburg University - Department of Finance ( email )

P.O. Box 90153
Tilburg, 5000 LE
Netherlands

Steven R. G. Ongena

University of Zurich - Department of Banking and 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

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

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