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The dynamics of bank location decisions in Australia

Christopher Heard, Flavio Menezes () and Alicia Rambaldi ()

Australian Journal of Management, 2018, vol. 43, issue 2, 241-262

Abstract: This article exploits a large panel to study trends in, and determinants of, the decisions made by the four largest Australian banks about whether to establish or maintain branch- and automated teller machine (ATM)-level presence in a local market between 2002 and 2013. These decisions are potentially important for competition in local banking markets. Our analysis suggests that past presence is the most important factor for explaining current presence in a particular local market. Moreover, we present evidence that the four largest banks co-locate branches. The relationship between the location of other (smaller) banks and the location of the four largest banks is less clear; there is some limited evidence that this relationship is negative for two of the four largest banks. Our results also suggest that the four largest banks displayed changed behaviour in terms of their branch location decisions after the global financial crisis and that the changes differed between banks. Our analysis of ATM location decisions reveals that the four largest banks follow different strategies. These results suggest that Australian banks did not shy away from this limited form of competition, either before or after the global financial crisis (GFC). JEL Classification: C23, D43, G21, L13

Keywords: Banking; branch location; entry; exit (search for similar items in EconPapers)
Date: 2018
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Working Paper: The Dynamics of Bank Location Decisions in Australia (2016) Downloads
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DOI: 10.1177/0312896217717572

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