Insights / Research BriefMar 25, 2024

Banks in Space

Ezra Oberfield, Esteban Rossi-Hansberg, Nicholas Trachter, Derek Wenning
The banking deregulation of the 1980s and 90s provides unique evidence of the way in which banks set up their branches across locations. Two forms of sorting explain observed location patterns well. Sorting on size, whereby top banks locate in the largest markets and smaller banks in marginal ones, and sorting according to funding needs whereby banks locate in regions that allow them to balance their loans and deposits.