Entry in Banking Markets

Event abstract

We empirically study banks’ decisions to enter new markets, using panel data on all US bank branches over the 1981-2016 period. We show that banks are more likely to expand in counties that are similar, in terms of industry distribution and household characteristics, to those in which they already have branches. Using several identification strategies, we find that banks value diversification, but face informational and technological barriers to diversification. Perhaps surprisingly, banks do not overcome these barriers via acquisitions: they are more likely to acquire branches in more similar areas. Barriers are instead partially overcome over time via information collection and technology acquisition.

Speaker biography

Guillaume Vuillemey is assistant Professor at HEC Paris and research affiliate at CEPR (London). His research focuses on financial intermediation, derivatives markets, as well as economic history. His research has been published in the Journal of Finance and in the Journal of Financial Economics, among others. He has been a visiting researcher at the European Central Bank and Harvard University, and is currently an affiliated researcher with the French banking regulator (ACPR).