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The Dynamics of Bank Location Decisions in Australia

Christopher Heard, Flavio Menezes () and Alicia Rambaldi ()
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Christopher Heard: School of Economics, The University of Queensland,

No 556, Discussion Papers Series from University of Queensland, School of Economics

Abstract: This paper 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 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 impact of the location of other (smaller) banks on the location of the four largest banks is less clear; there is some limited evidence that this impact is negative for two of the four largest banks. Our results also suggest that the four largest banks responded differently to the GFC in terms of their branch location decisions. 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 competition, either before or after the GFC.

Keywords: branch location; exit; entry; banking (search for similar items in EconPapers)
Date: 2016-03-08
New Economics Papers: this item is included in nep-cse and nep-pay
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Journal Article: The dynamics of bank location decisions in Australia (2018) Downloads
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