Journal of Financial Economics Vol. 185 2026
The decline of branch banking
Abstract
We study branch openings and closures in U.S. banking. Both are concentrated where depositors are rate-sensitive and place less value on physical access, patterns driven by financially sophisticated households with greater digital adoption. The effects are strongest for large banks, with lending playing a lesser role. Incumbents retain branches where depositors are less sensitive and more reliant on proximity; entrants avoid such markets because sticky customers are difficult to attract. The Pandemic accelerated closures while allowing banks to retain deposits through online channels. Overall, depositor sophistication — through rate sensitivity and reduced branch reliance — drives modern branch restructuring.
- DOI
- 10.1016/j.jfineco.2026.104383
- Volume
- 185
- Pages
- 104383
- Language
- en
- Sources
- crossref openalex