HOW DOES BANK BRANCH SUPPLY SPUR RURAL INCOME GROWTH? EVIDENCE FROM COUNTIES IN CHINA

Yipeng Wang, Yaxiong Zhao and Liqiong Lin ()
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Yipeng Wang: College of Finance and Statistics, Hunan University, Changsha, P. R. ChinaBusiness School, The University of Edinburgh Edinburgh, UK2Business School, The University of Edinburgh, Edinburgh, UK
Yaxiong Zhao: College of Economics and Management Fujian Agriculture and Forestry University Fuzhou, P. R. China
Liqiong Lin: College of Finance and Statistics, Hunan University Changsha, P. R. China

The Singapore Economic Review (SER), 2025, vol. 70, issue 05, 1357-1392

Abstract: In this paper, we investigate how bank branch supply affects rural income growth by analyzing a panel dataset of 1,542 counties in China between 2006 and 2019. We discover that enhancing bank branch supply fosters rural income growth through financial utilization and economic growth, and the process is also negatively moderated by rural financial utilization and economic levels. We then prove the inverted U-shaped relationship between bank branch supply and rural income growth, indicating that the marginal effect of bank branch supply increases at the earlier stage where rural bank branch supply lags behind the bank branch demand in boosting regional economic growth, and decreases at the later stage where the rural bank branch supply has exceeded the “optimal point†of bank branch supply. Further, bank branch expansion is more efficient than FinTech development in accelerating rural income growth, particularly in impoverished counties. The findings imply the necessity of enhancing bank branch supply in rural areas, especially in underdeveloped rural areas, to accelerate rural income growth.

Keywords: Bank branch supply; financial utilization; economic growth; rural income growth (search for similar items in EconPapers)
JEL-codes: G21 O10 O18 R11 (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1142/S0217590823500352

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