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A Spatial Model of Bank Branches in Canada

Heng Chen () and Matthew Strathearn ()

Staff Working Papers from Bank of Canada

Abstract: This research aims to empirically analyze the spatial distribution of bank-branch networks in Canada. We study the market structure (both industrial and geographic concentrations) within the networks’ own or adjacent postal areas. Our empirical framework considers branch density (the ratio of the total number of branches to the area size) by employing a spatial two-way fixed-effects model. Our main finding is that there are no effects associated with market structure; however, there are strong spatial socioeconomic effects from the networks' own and nearby areas. In addition, we also study the effect of spatial competition from rival banks: we find that large banks and small banks tend to avoid markets dominated by their competitors.

Keywords: Firm dynamics; Market structure and pricing (search for similar items in EconPapers)
JEL-codes: L1 R3 (search for similar items in EconPapers)
Pages: 46 pages
Date: 2020-01
New Economics Papers: this item is included in nep-com, nep-geo, nep-net and nep-ure
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