The Demise of Branch Banking - Technology, Consolidation, Bank Fragility

54 Pages Posted: 30 Sep 2020 Last revised: 30 Oct 2023

See all articles by Jan Keil

Jan Keil

Humboldt University of Berlin

Steven Ongena

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

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

Suggested Citation

Keil, Jan and Ongena, Steven R. G., The Demise of Branch Banking - Technology, Consolidation, Bank Fragility (September 29, 2020). Swiss Finance Institute Research Paper No. 20-83, Available at SSRN: https://ssrn.com/abstract=3701638 or http://dx.doi.org/10.2139/ssrn.3701638

Jan Keil

Humboldt University of Berlin ( email )

Dorotheenstrasse 1
Berlin, 10099
Germany

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

Steven R. G. Ongena (Contact Author)

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

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