Bank Branches Since the 2012 Spanish Banking Reform: Impact on Some Municipal Variables

Guillermo Peña

A chapter in Eurasian Business and Economics Perspectives, 2025, pp 197-217 from Springer

Abstract: Abstract The main target of this chapter is to study the impact on the Spanish municipalities of the financial reform after the Law of Sanitation of the Financial Sector of February, 2012. This is analyzed by observing the effects of reducing the number of banking branches to lower than 4—or between less than 5 to 5 as robustness check—on some variables of Spanish municipalities. To this aim, recent Difference-in-Differences techniques with multiple periods are applied to the effects of the annual loose of bank branches on municipalities for 2012–2021 derived of that reform over the population. Additionally, the effects on other variables as net income or income inequality measured by the P80/P20 participation are also analyzed. The results show a reduction in the population of rural areas provoked by the disappearance of the banking branches, a decrease that is significant and robust to the different specifications, control variables and samples but is only temporal for the first years, with a full recovery in 5 years. The results also show a negative but temporal impact on both economic activity per capita and income inequality. This chapter and its results reveal the importance of banking branches not only as a crucial service in isolated areas, but also as a good tool for fighting against the countryside depopulation. Additional policy measures are provided.

Keywords: Financial reform; Depopulation; Rural areas; Countryside; Differences in differences (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:spr:eurchp:978-3-031-84319-8_12

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DOI: 10.1007/978-3-031-84319-8_12

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