Get 20M+ Full-Text Papers For Less Than $1.50/day. Start a 14-Day Trial for You or Your Team.

Learn More →

The determinants of bank branch location in India: an empirical investigation

The determinants of bank branch location in India: an empirical investigation Bank branching plays a significant role in a wide range of economic activities. Existing studies on determinants of bank branching activities largely focus on developed countries; studies devoted to developing countries are scant. The purpose of this paper is to examine the determinants of bank branching activities in one of the largest developing country India.Design/methodology/approachThe authors employ a unique longitudinal data to study the determinants of bank branch location in India. These data are collected at the state level covering 25 Indian states for the period 2006–2017. The authors employ Poisson regression that are better suited for modeling counted dependent variable.FindingsFirst, region and bank specific factors such as size of population and bank deposits influence location of bank branches. Second, the relationship between these factors and branch locations is heterogeneous across different types of banks and across states with different business environments.Practical implicationsFirst, from the view of banks, considering the factors of branch location are crucial in order to set out branching strategy. Irrespective of policy measures aimed at promoting financial inclusion in India, the authors show that banks consider economic activities in the region in locating their branches. Second, from the view of policy makers and regulators, such branching strategy could potentially contribute to financial exclusion. As a result, population in the less developed regions may be excluded from accessing financial services. Hence, policy makers and regulators should take into this account when formulating policies aimed at promoting financial inclusion.Originality/valueFirst, while existing studies largely focus on developed countries, studies devoted to developing countries are scant. To the best of our knowledge, the authors have not come across any study that investigates the determinants of bank branch location in India, so the authors reasonably believe that this study is a first-of-its-kind. Second, the study provides a new perspective concerning how regional and bank specific factors influence banks of different ownership in locating branches. Third, while traditional regression used to be a method of choice among early studies, the authors employ Poisson regression that is better suited for modeling counted dependent variable. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png International Journal of Bank Marketing Emerald Publishing

The determinants of bank branch location in India: an empirical investigation

Loading next page...
 
/lp/emerald-publishing/the-determinants-of-bank-branch-location-in-india-an-empirical-GpVRVQOdyP

References (48)

Publisher
Emerald Publishing
Copyright
© Emerald Publishing Limited
ISSN
0265-2323
DOI
10.1108/ijbm-07-2020-0395
Publisher site
See Article on Publisher Site

Abstract

Bank branching plays a significant role in a wide range of economic activities. Existing studies on determinants of bank branching activities largely focus on developed countries; studies devoted to developing countries are scant. The purpose of this paper is to examine the determinants of bank branching activities in one of the largest developing country India.Design/methodology/approachThe authors employ a unique longitudinal data to study the determinants of bank branch location in India. These data are collected at the state level covering 25 Indian states for the period 2006–2017. The authors employ Poisson regression that are better suited for modeling counted dependent variable.FindingsFirst, region and bank specific factors such as size of population and bank deposits influence location of bank branches. Second, the relationship between these factors and branch locations is heterogeneous across different types of banks and across states with different business environments.Practical implicationsFirst, from the view of banks, considering the factors of branch location are crucial in order to set out branching strategy. Irrespective of policy measures aimed at promoting financial inclusion in India, the authors show that banks consider economic activities in the region in locating their branches. Second, from the view of policy makers and regulators, such branching strategy could potentially contribute to financial exclusion. As a result, population in the less developed regions may be excluded from accessing financial services. Hence, policy makers and regulators should take into this account when formulating policies aimed at promoting financial inclusion.Originality/valueFirst, while existing studies largely focus on developed countries, studies devoted to developing countries are scant. To the best of our knowledge, the authors have not come across any study that investigates the determinants of bank branch location in India, so the authors reasonably believe that this study is a first-of-its-kind. Second, the study provides a new perspective concerning how regional and bank specific factors influence banks of different ownership in locating branches. Third, while traditional regression used to be a method of choice among early studies, the authors employ Poisson regression that is better suited for modeling counted dependent variable.

Journal

International Journal of Bank MarketingEmerald Publishing

Published: Jul 6, 2021

Keywords: Bank branch; India; Financial inclusion; Financial exclusion; Panel data; Public policy

There are no references for this article.