Why Do Japanese Non-Local Regional Banks Enter Other Prefectures Under the Region-Based Relationship Banking Policy?

Kondo, Kazumine; Harimaya, Kozo

doi:10.1007/s10842-014-0176-2

Cited by 5 publications

(4 citation statements)

References 30 publications

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“…Feinberg (2009) shows that market size and growth are the motivating factors influencing the entry of large banks in rural areas. Kondo and Harimaya (2014) find that in Japan, the presence of high performing companies is a crucial factor for nonlocal regional banks in entering new regions. Cohen and Mazzeo (2010) examine existing competition faced by the banks to open new branches.…”

Section: What Factors Influence Bank Branch Location?mentioning

confidence: 91%

“…In other words, the higher number of businesses, the higher need for financial services and the higher need for financial services, the higher number of bank branches. For example, Kondo and Harimaya (2014) find that the presence of high performing companies is a crucial factor in nonlocal regional banks entering new regions. In this study, we employ a number of factories as a measure of business activities [16].…”

Section: Methodsmentioning

confidence: 99%

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

Zhang

Arora

Colombage

2021

IJBM

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PurposeBank 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.

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Section: What Factors Influence Bank Branch Location?mentioning

confidence: 91%

Section: Methodsmentioning

confidence: 99%

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

Zhang

Arora

Colombage

2021

IJBM

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“…Feinberg, 2009; Chen and Strathearn, 2020), economic structure (e.g. Alamá and Tortosa-Ausina, 2012; Kondo and Harimaya, 2014), and banking competition (e.g. Hannan and Hanweck, 2008; Boďa and Čunderlíková, 2020).…”

Section: Literature Reviewmentioning

confidence: 99%

“…Demand for financial services of firms in industrial sectors can be very different from that of farmers. Several studies, such as Alamá and Tortosa-Ausina (2012), Kondo and Harimaya (2014), find that the share of secondary industry has a significant positive impact on the number of bank branches.…”

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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The effects of consolidation on bank cost savings: Evidence from Japanese regional banks

Harimaya

2018

Japan and the World Economy

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Why Do Japanese Non-Local Regional Banks Enter Other Prefectures Under the Region-Based Relationship Banking Policy?

Cited by 5 publications

References 30 publications

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

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

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

The effects of consolidation on bank cost savings: Evidence from Japanese regional banks

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