Bank geographic diversification and market competition

Shuo Liang, Fernando Moreira and Joosung Lee

The Quarterly Review of Economics and Finance, 2025, vol. 102, issue C

Abstract: We investigate the effect of geographic diversification on competition, proposing new bank-level competition indicators to capture the degree of competition in individual banks’ markets. By using the gravity-deregulation model to construct an instrument for geographic diversification, we find that geographic diversification increases the degree of competition in specific banking markets. Mechanism analyses suggest that geographic diversification spurs market competition through changing two elements of the banking market structure, namely, concentration level in the market and banks’ market shares. Our findings imply that banks’ geographic diversification could lead to an unintended effect on market competitiveness and the market structure could be endogenous to banks’ behaviours.

Keywords: Geographic diversification; Market competition; Market structure (search for similar items in EconPapers)
JEL-codes: D40 G20 G21 L11 (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S1062976925000559
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:quaeco:v:102:y:2025:i:c:s1062976925000559

DOI: 10.1016/j.qref.2025.102014

Access Statistics for this article

The Quarterly Review of Economics and Finance is currently edited by R. J. Arnould and J. E. Finnerty

More articles in The Quarterly Review of Economics and Finance from Elsevier
Bibliographic data for series maintained by Catherine Liu ().