Should Bank Branching Be Regulated? Theory and Empirical Evidence from Four European Countries

Frank A Schmid

Journal of Regulatory Economics, 1994, vol. 6, issue 2, 137-49

Abstract: Along with the liberalisation of bank branching, which was pushed ahead in most OECD member countries during the past several decades, the fear of "overbranched" markets has arisen. In a model of spatial competition, the welfare effects of bank branching regulation are investigated and empirical results are presented from a pooled cross-section time series analysis from four European countries. It is shown that for all observations in the sample, fewer branches would have been socially undesirable. Moreover, the frequently posed hypothesis that a positive relationship exists between the number of branches and the price for financial intermediation is rejected. Copyright 1994 by Kluwer Academic Publishers

Date: 1994
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