The Demise of Branch Banking - Technology, Consolidation, Bank Fragility
54 Pages Posted: 30 Sep 2020 Last revised: 30 Oct 2023
Date Written: September 29, 2020
Abstract
We study bank branching dynamics across the 3,143 US counties during 26 years. During the last decade banks have been closing branches at an unprecedented rate. At its peak in 2009 there were 90,783 branches, by 2020 there were twelve percent fewer. While technological factors correlate with this branching dynamics, bank fragility and consolidation are also robustly associated with the change in branch numbers (and their openings and closures). Interestingly, technological capabilities to service customers, such as online banking, seem less tightly linked to de-branching than banks‘ internal information processing technology. Our analyses further reveal that while large banks rely on internal technology to shed branches, small banks close branches when fragile or consolidating.
Keywords: branches, banking, technology, bank health, mergers and acquisitions
JEL Classification: G21
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