LOCAL SURVIVAL OF BANKS' BRANCHES IN BRAZIL

Abstract

The aim of this study is to better understand the determinants of the local survival of bank branches in Brazil. The banking system has undergone several changes, especially with the advent of new information technologies, which directly affect the logic of the existence of bank branches. However, bank branches are still important channels for accessing financial services, especially in peripheral regions in the country, and the reduction in their number may affect local development in different municipalities. The analysis offers a bank branch survival indicator, at the municipal level, from which it is intended to verify, through a panel data model, the determinants of branch survival, including elements related to portfolio management agencies, and the characteristics of local banking markets and municipalities. Results indicate the importance of local demand and the good management of assets and liabilities as fundamental elements of local branch survival. However, the concentration of resources in municipalities tends to increase competition between agencies and accelerate the replacement of branches by other agents and services available, reducing the local survival rate. These results point to the importance of understanding the local dynamics in the current processes of change in the banking system in order to inform sectoral and public development strategies.