Content №4 от 2019
Availability of Banks’ Offices in the Russian Regions: Estimation of the Role of Distances and Other Factors
In the past two decades, Russia has seen a decrease in the number of banks. The two reasons for the drop are as follows: the concentration and consolidation processes taking place in the banking industry throughout the world, and the banking sector sanitation policy pursued by the Central Bank of the Russian Federation (CBR). As a consequence, now banking activities in the country are conducted primarily by banks with headquarters in the capital. The article discusses the implications of such geographical centralization of the Russian banking sector in terms of providing the regions with enough bank branches. The purpose of the study is to assess the impact of distances on the ability of banks to maintain their presence in the regions, as well as to identify differences in this regard between different categories of banks, taking into account the type of ownership, headquarters location, and bank size. The estimation of the influence of distances on the number of banks ’ offices in the regions that were available at the end of 2018, according to the CBR data, is made using the Poisson regression method for gravity models of interregional trade. The results showed that the largest banks orient their branch distribution strategy around the characteristics of locations, regardless of their distance from the bank headquarters. At the same time, the type of ownership does not matter much, although the actual availability of financial services and financial inclusion across the country is largely ensured by the largest state-owned banks. The strategy of placing offices is also associated with the headquarters location being in Moscow or elsewhere. The remaining regional banks often act locally and consider distance a significant factor of the branch network formation. Despite the 2018 bank licensing reform, the decline in the number of banks is continuing and the level of competition and diversity in the banking sector in the regions remains in question.
