Bank branches, jobs, and the search for economic activity

Rodrigo Cuenca-de-Armas (), Luisa Alamá-Sabater (), Miguel Ángel Márquez () and Emili Tortosa-Ausina
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Rodrigo Cuenca-de-Armas: Department of Economics, Universitat Jaume I, Castellón, Spain
Luisa Alamá-Sabater: Department of Economics and IIDL, Universitat Jaume I, Castellón, Spain
Miguel Ángel Márquez: Department of Economics, Universidad de Extremadura, Spain

No 2026/04, Working Papers from Economics Department, Universitat Jaume I, Castellón (Spain)

Abstract: This paper examines the complex interrelationships between bank branches, employment, and population dynamics in Spanish municipalities from 2008 to 2019. Using a simultaneous equations model based on Carlino and Mills’ (1987) framework, we analyse data from 8,014 municipalities to investigate whether people follow jobs and financial services, whether jobs follow people and financial services, and whether financial services follow people and jobs. Our findings reveal a bidirectional relationship between population and employment, with employment following population more strongly than vice versa, particularly in urban areas. We also find a bidirectional relationship between population and bank branches, with bank branches following population more intensely than population following bank branches. Interestingly, no significant relationship was observed between employment and bank branches. Furthermore, our results indicate that bank branch closures influenced depopulation in certain territories, though banks primarily responded to rather than caused population movements. These decisions were not significantly influenced by the percentage of elderly residents in municipalities. Additionally, we find that rural and intermediate municipalities with higher per capita income gained population during the study period. Our research contributes to the literature on financial inclusion, left-behind places, and regional development by providing empirical evidence on the role of banking services in economic activity and population dynamics in Spain.

Keywords: bank branches; depopulation; financial inclusion; left-behind places; simultaneous equations (search for similar items in EconPapers)
JEL-codes: G21 O18 R11 R23 (search for similar items in EconPapers)
Pages: 53 pages
Date: 2026
New Economics Papers: this item is included in nep-fdg, nep-mfd and nep-pay
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Persistent link: https://EconPapers.repec.org/RePEc:jau:wpaper:2026/04

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