← Search

Review of Finance Vol. 28 No. 6 2024

Move a little closer? Information sharing and the spatial clustering of bank branches

Shusen Qi1,2; Ralph De Haas3,4,5; Steven Ongena4,5,6,7; Stefan Straetmans8,9; Tamas Vadasz4

1 Xiamen University, School of Management , Xiamen, · 2 Peking University, Institute of Digital Finance , Beijing, · 3 European Bank for Reconstruction and Development , London, · 4 KU Leuven , Leuven, · 5 CEPR , London, · 6 University of Zurich, Swiss Finance Institute , Zürich, · 7 NTNU Business School , Trondheim, · 8 Maastricht University, School of Business and Economics , Maastricht, · 9 University of Antwerp, Faculty of Business and Economics , Antwerp,

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.

DOI
10.1093/rof/rfae021
Volume
28
Issue
6
Pages
1881-1918
Language
en
Sources
bibtex:phds-export.bib openalex crossref

Cite