What Drives Disparities in Bank Branch Use? A Geospatial Analysis
Alexander Zentefis, Assistant Professor of Finance
Alex Zentefis: What Drives Disparities in Bank Branch Use? A Geospatial Analysis, forthcoming in the Review of Finance
Abstract
We examine whether limited access or lower demand explains why low-income and Black households use bank branches less than high-income and White households, despite relying on branch services more. We obtain measures of access and demand-related factors from a gravity model of consumer trips to bank branches, estimated using mobile device geolocation data. We find that lower demand, not lower access, explains reduced branch visits in low-income communities. In contrast, poorer access fully accounts for reduced branch visits in Black communities, where demand for branch services is no different than in White communities nationally and surpasses it in large cities.