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A Spatial Panel Model of Bank Branches in Canada

ISBN: 978-1-83867-576-9, eISBN: 978-1-83867-575-2

Publication date: 19 October 2020

Abstract

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

Keywords

Acknowledgements

Acknowledgments

We thank Kim P. Huynh, Arturas Juodis and Marcel C. Voia for helpful comments. We also thank participants of the Advances in Econometrics Conference: The Econometrics of Networks at Sibiu, Romania for helpful comments and suggestions. The views expressed in this paper are solely those of the authors and may differ from official Bank of Canada views. No responsibility for them should be attributed to the Bank. All errors are our own.

Citation

Chen, H. and Strathearn, M. (2020), "A Spatial Panel Model of Bank Branches in Canada", de Paula, Á., Tamer, E. and Voia, M.-C. (Ed.) The Econometrics of Networks (Advances in Econometrics, Vol. 42), Emerald Publishing Limited, Leeds, pp. 175-204. https://doi.org/10.1108/S0731-905320200000042012

Publisher

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Emerald Publishing Limited