The Branch Puzzle: Why Are there Still Bank Branches? Accessible Data

Figure 1: Number of branches of FDIC-insured commercial banks

 

Figure 1 shows the number of branches of FDIC insured commercial banks. The horizontal axis shows the year from 1990 to 2017 and the vertical axis the number of branches from 50,000 to 90,000.

The number of branches increases approximately linearly between 1990 and 2008, from about 50,000 to more than 80,000. It then plateaus between 2008 and 2012 around that number. Between 2013 and 2017 the number of branches decreased slowly and roughly linearly to just below 80,000.

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Figure 2: Effects of Depositor Characteristics on Branch Use

 

Figure 2 has four panels (a)-(d), showing estimated effects of depositor characteristics on branch use.

Panel (a) shows the average marginal effect of age on branch use for different age groups measured in percentage points. The age groups are 35-44, 45-54, 55-64, 65-74 and >75. The effects are measured relative to the omitted age group <35. The estimated effects are approximately 0 for 35-44, 5 for 45-54 and 55-64, 8 for 65-74, and 6 for >75.

Panel (b) shows the average marginal effect of wealth on branch use for different ranges of wealth percentiles measured in percentage points. The effects are measured relative to the omitted category, which is <25th percentile. The effects are 2.5 for 25-49th percentile, 6 for 50th-74th percentile, 9 for 75th-89th percentile and 7 for >90th percentile.

Panel (c) shows the average marginal effect of income on branch use measured in percentage points for different ranges of income percentiles. The effects are measured relative to the omitted group, which is <20th percentile. The effects are 0 for 20-39th percentile and 40th-59th percentile, -2.5 for 60th-79th percentile and 80th-89th percentile and -6 for >90th percentile.

Panel (d) shows the average marginal effect of occupation type on branch use measured in percentage points. The effects are measured relative to the omitted occupation, which is "Working for Someone Else". The effects are 6 for self-employed/partnership, 0 for retired/disabled/student/homemaker and 4 for other/not working.

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Figure 3: Percent of SCF Households That List the “Location of Offices” as the Most Important Determinant for Selecting their Primary Financial Institution, By Birth Cohort

 

Figure 3 shows the percentage of SCF households that list "Location of Offices" as the most important determinant for selecting their primary financial institution, by birth cohort.

Three different cohorts are shown. Cohort 1 with birth years 1972-1986, cohort 2 with birth years 1952-1971 and cohort 3 with birth years 1937-1951.

The horizontal axis is the age of a household in the middle of the cohort birth range, and ranges from 20 years to 70 years.

The percentage increases from about 35 percent for 20 year olds to about 47 percent for 30 year olds. In this region only data for cohort 1 is available.

Between 30 and 35 years data from cohorts 1 and 2 is available. The data for both cohorts is similar and the percentage decreases from about 47 percent to around 40 percent.

For ages 35 to about 45 only data from cohort 2 is available and the percentage increases from around 40 to around 45 percent.

For ages 45 to 55 data from cohorts 2 and 3 is available. With one exception the data for both cohorts is similar and the percentage moves sideways at a level of about 45 percent.

For ages 55 and above only data from cohort 3 is available. The percentage moves sideways at about 45 percent until the age of 65. It then increases to a level of about 47 percent, and increases further to more than 50 percent for 70 year olds.

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Figure 4: Average Share of Loans by Lenders Without Local Branch Presence Among CRA Reporters

 

Figure 4 shows the average share of loans by lenders without a local branch presence among CRA reporters.

The figure has six panels. Panels (a) and (b) show data for all markets, panels (c) and (d) for urban markets and panels (e) and (f) for rural markets. Panels (a), (c) and (e) show data for loans from $100,000 to $250,000 and panels (b), (d) and (f) for loans from $250,000 to $1 million. All graphs show data between 2000 and 2016.

For panels (a) and (b) the share stays around 24 percent between 2000 and 2011 and increases to around 35 percent (panel (a)) and 31 percent (panel (b)) in 2016.

For panels (c) and (d) the share stays around 8 percent between 2000 and 2011, and increases to around 20 percent (panel (c)) or 13 percent (panel (d)) in 2016.

For panels (e) and (f) the share stays around 35 percent between 2000 and 2011 and increased since to around 43 percent (panel (e)) or 40 percent (panel (f)).

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Figure 5: Correlation Between Branch Share and Loan Share

 

Figure 5 shows coefficient estimates that capture the correlation between the branch share and the loan share of bank in a local banking market. The coefficients are shown for each year from 2000 to 2016. The coefficients are between 0.67 and 0.71 between 2000 and 2010, and then decrease to around 0.6 in 2016.

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Last Update: August 20, 2018