Shrinking Networks: A Spatial Analysis of Bank Branch Closures
Abstract: As more consumers take advantage of online banking services, branch networks are declining across the country. Limited attention has been given to identifying any possible spatial patterns of branch closures and, more importantly, the community demographics where branches close their doors. This analysis uses an innovative spatial statistics concept to study financial services: Using data from 2010 to 2016, a random labelling test is conducted to understand branch closure clustering in the Philadelphia, Chicago, and Baltimore metropolitan statistical areas (MSAs). Additionally, spatial autocorrelation is tested, and an MSA-level spatial regression analysis is done to see if there is a pattern to branch closures in metropolitan areas. I find evidence of branch closure clusters in the Chicago and Philadelphia MSAs; however, this spatial pattern is only observable within the suburbs, not the primary city itself. Using a random labelling test is a methodological innovation in regional economic studies and propels our understanding of banking deserts and underserved neighborhoods.
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Provider: Federal Reserve Bank of Philadelphia
Part of Series: Working Papers
Publication Date: 2018-03-20
Pages: 39 pages