A decision model for bank branch site selection: Define branch success and do not deviate

Cabello, Julia García

doi:10.1016/j.seps.2017.09.004

Cited by 14 publications

(8 citation statements)

References 27 publications

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“…Site selection is one of the most important decision-making processes for firms since, if done correctly, it provides access to the best customers and the greatest market potential, while poor location choices are costly and difficult to reverse (Cabello, 2019). This also applies to the banking sector, where decisions about branch location distributions are of strategic importance to achieve the objectives of banks.…”

Section: Theoretical Framework and Hypothesesmentioning

confidence: 99%

Determinants of branching decisions of State-controlled commercial banks: evidence from China

Sun

Liu

2023

IJBM

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PurposeBranching is one of the crucial strategic non-price actions for banks. Previous studies on the impact of state ownership upon banks focus on bank lending behavior. This paper aims to offer a novel investigation of how state ownership affects bank branching behavior by examining state-controlled commercial banks (SCCBs) in the context of the largest developing and transitional country China.Design/methodology/approachThe two-part model (TPM) is applied to analyze the branching decision process. In the first stage, the dependent variable is the choice of bank branching dynamics and in the second stage the dependent variable is the number of new branches or the number of closed branches. For robustness check, the ordered probit selection model allowing for interdependence of the two stage decisions is also employed.FindingsUsing a unique dataset of bank branches in China, this paper finds that the branching decisions of Chinese SCCBs are driven by both profit motivated factors including population size, population density, income level, financial development and banking competition and politically motivated factors as represented with the proportion of SOEs. As a comparison, branching decisions of joint-stock banks in China are fully determined by profit motivated factors.Originality/valueFirst, this study is the first to explore the effect of state ownership on bank branching decisions, providing a new insight on the literature regarding to the impact of state ownership on bank decisions. Second, this study explores the potential effect of politically motivated factors on bank branching decisions, filling the gap in bank branching literature. Third, this study can contribute to bank branching literature by enriching the limited understanding of how SCCBs make branching decisions. Lastly, this study applies novel empirical strategies to analyze bank branching decisions, including the TPM and the ordered probit selection model.

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Section: Theoretical Framework and Hypothesesmentioning

confidence: 99%

Determinants of branching decisions of State-controlled commercial banks: evidence from China

Sun

Liu

2023

IJBM

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“…These factors were identified amongst 38 factors split into four blocks: (1) location features, (2) trade area characteristics, (3) competitive situation features, and (4) internal branch characteristics. Cabello (2019) proposed a unified methodology to decide on a bank branch site, and compiled as many as 30 main factors divided into ten categories describing (1) potential for the customer base, (2) socioeconomic situation, (3) social potential, (4) commercial potential, (5) competition, (6) financial situation, (7) ease of access, (8) growth potential, ( 9) investment barriers, and (10) government policy. Less comprehensive surveys of bank branch location factors that arose in the process of developing a decision support model are Min (1989), Abbasi (2003) and Cinar (2009).…”

Section: Factors Of Bank Branch Site Selectionmentioning

confidence: 99%

Determinants of bank branch density: a case study of Slovakia

Boďa

Čunderlíková

2020

IJBM

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PurposeThis paper studies the density of bank branches in districts of Slovakia and aims to identify determinants that explain or justify districtural differences in the density of bank branches.Design/methodology/approachBank branch density is measured by the number of branches in a district, and banks are further differentiated by size and profile. Potential determinants of bank branch density are sought through univariate and bivariate Poisson regressions amongst economic factors, socioeconomic factors, technological factors, urbanization factors, and branch market concentration.FindingsUsing data from 2016, it has been found that branch numbers in districts are determined chiefly by five factors that describe their economic development, population size with its characteristics, and existent branch concentration. The spatial distribution of bank branches in the territory of Slovakia is not random, but is found to be affected by environmental factors measurable at the districtural level. Only 22 Slovak districts representing administrative or economic centers are expected to be over-branched.Practical implicationsThe study helps to identify factors that need be accounted for in planning and redesigning of branch networks or in implementing mergers and acquisitions on a bank level. The results are also useful in regional policy and regulatory oversight.Originality/valueThe present study is unique since the decision-making processes of Slovak commercial banks in planning the location and density of their branch networks have not been rationalized and researched as of yet.

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“…Banks manage the money, credits, savings, and other assets of customers who require this service due to the security and guarantee they offer to store cash. One of the most critical decisions in this industry is the location of branches, as it ensures better customer access and improves banking market potential [1]. However, determining the branches' location is complex because multiple criteria can be considered.…”

Section: Introductionmentioning

confidence: 99%

Multi-Objective Location Problem for Bank Branches

Montero,

Nicolis,

Reid

et al. 2023

IEEE Access

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Although current technologies allow simple online banking transactions, it is vital to guarantee access to bank branches both for customers and businesses. Banking branch interactions improve trust in bank institutions in everyday situations and emergencies. This research addresses the problem of the location of banking facilities. A set of objective functions related to socio-economic variables, geographical coverage and bankers preferences are considered. A multi-objective linear programming model is proposed to solve different versions of the problem considering a maximum radial distance coverage. The (mono/bi/multi) objective versions of the problem are analyzed by varying the values of the weights of objective functions in the proposed model that is then solved using AMPL Gurobi solver. The case study is carried out in Santiago de Chile with data from a local banking institution. In the results, the bank's initial situation is analyzed to contrast the solutions found later. This analysis is performed considering the mono-objective, bi-objective, and multi-objective nature of the studied problem. In all these cases, we analyzed changes in the structure of solutions as the coverage of the branches increases. The proposed model can quickly obtain feasible solutions according to the needs and available resources, allowing to replicate the analysis in different institutions under similar conditions considering strategically established priorities.

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A decision model for bank branch site selection: Define branch success and do not deviate

Cited by 14 publications

References 27 publications

Determinants of branching decisions of State-controlled commercial banks: evidence from China

Determinants of branching decisions of State-controlled commercial banks: evidence from China

Determinants of bank branch density: a case study of Slovakia

Multi-Objective Location Problem for Bank Branches

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