PROFITABILITY AND BANK DE-BRANCHING IN THE DIGITAL AGE: EVIDENCE FROM RUSSIAN REGIONS

Evgenii Zimin () and Maria Semenova
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Evgenii Zimin: National Research University Higher School of Economics

HSE Working papers from National Research University Higher School of Economics

Abstract: Bank de-branching is one of the key trends in banking sectors all over the world. This paper explores the conditions in which de-branching brings more profits to the bank. This issue is attracting considerable interest due to recent technological developments and increasing competition, including from fintech companies. Using the data from 84 Russian regions over the period of 2010–2020, we test whether the adoption of internet technologies and financial digital literacy (FDL) are positively related to bank de-branching and whether they add to bank de-branching efficiency in terms of bank profitability. We show that a higher degree of adoption of technological innovation and higher levels of FDL are positively related to bank de-branching. Furthermore, we observe that banks closing their branches in regions exhibiting higher levels of internet development and FDL gain more profits from de-branching. The results are robust to various model specifications

Keywords: De-branching; Banks; Bank Profitability; Financial digital literacy; Innovations; Russia; Regions (search for similar items in EconPapers)
JEL-codes: G01 G21 P2 (search for similar items in EconPapers)
Pages: 45 pages
Date: 2022
New Economics Papers: this item is included in nep-cis and nep-pay
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Published in WP BRP Series: Financial Economics / FE, December 2022, pages - 45

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