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Article
Publication date: 12 March 2021

Quanda Zhang, Rashmi Arora and Sisira Colombage

Bank branching plays a significant role in a wide range of economic activities. Existing studies on determinants of bank branching activities largely focus on developed countries;…

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Abstract

Purpose

Bank branching plays a significant role in a wide range of economic activities. Existing studies on determinants of bank branching activities largely focus on developed countries; studies devoted to developing countries are scant. The purpose of this paper is to examine the determinants of bank branching activities in one of the largest developing country India.

Design/methodology/approach

The authors employ a unique longitudinal data to study the determinants of bank branch location in India. These data are collected at the state level covering 25 Indian states for the period 2006–2017. The authors employ Poisson regression that are better suited for modeling counted dependent variable.

Findings

First, region and bank specific factors such as size of population and bank deposits influence location of bank branches. Second, the relationship between these factors and branch locations is heterogeneous across different types of banks and across states with different business environments.

Practical implications

First, from the view of banks, considering the factors of branch location are crucial in order to set out branching strategy. Irrespective of policy measures aimed at promoting financial inclusion in India, the authors show that banks consider economic activities in the region in locating their branches. Second, from the view of policy makers and regulators, such branching strategy could potentially contribute to financial exclusion. As a result, population in the less developed regions may be excluded from accessing financial services. Hence, policy makers and regulators should take into this account when formulating policies aimed at promoting financial inclusion.

Originality/value

First, while existing studies largely focus on developed countries, studies devoted to developing countries are scant. To the best of our knowledge, the authors have not come across any study that investigates the determinants of bank branch location in India, so the authors reasonably believe that this study is a first-of-its-kind. Second, the study provides a new perspective concerning how regional and bank specific factors influence banks of different ownership in locating branches. Third, while traditional regression used to be a method of choice among early studies, the authors employ Poisson regression that is better suited for modeling counted dependent variable.

Details

International Journal of Bank Marketing, vol. 39 no. 5
Type: Research Article
ISSN: 0265-2323

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Article
Publication date: 29 July 2014

Quanda Zhang and Rongda Chen

Financial repression refers to any of measures that government employs to prevent the financial intermediaries of an economy from functioning at their full capacity. On the…

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Abstract

Purpose

Financial repression refers to any of measures that government employs to prevent the financial intermediaries of an economy from functioning at their full capacity. On the contrary, financial deepening refers to the increased provision of financial services with a wider choice of services geared to all levels of society, which is the process of relieving financial constraint. With the theory of financial repression and financial deepening, the purpose of this paper is to focus on the performance of the financial repression in China and its influences on the financing of the small- and medium-sized enterprises (SMEs).

Design/methodology/approach

The work procedure is as follows: first, the monetization rate and financial interrelations ratio (FIR) are defined to measure the degree of financial repression; next, the classical GM(1,1) model and the metabolic GM(1,1) model are established, respectively, comparison is given out to show which model owns better adaptability. Finally, with metabolic GM(1,1) model, this paper predicts the monetization ratio and FIR in the next few years properly.

Findings

Unlike other theories which ascribe the financing difficulty of the SMEs to various factors, the paper argues that the financial repression in China should be responsible for the financing difficulty of the SMEs based on the theory of financial repression and financial deepening.

Originality/value

This paper points out that measures should be taken to accelerate the progress of the reform of interest rates and promote the efficiency of the financial market system as well as establish the multi-level capital market system for the SMEs to overcome the difficulty.

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Article
Publication date: 28 October 2014

Quanda Zhang

The purpose of this paper is to clarify the relationship between income inequality and financial deepening. The majority of theoretical studies on the relationship between them…

338

Abstract

Purpose

The purpose of this paper is to clarify the relationship between income inequality and financial deepening. The majority of theoretical studies on the relationship between them argue that financial deepening has a positive effect on the income inequality. This paper aims to study the case of China, and explores whether the effects of financial deepening on income inequality varies between urban residents and rural residents.

Design/methodology/approach

Using the grey incidence analysis, this paper first calculates the degree of grey incidence between dependent variables, i.e. per capita disposable income of urban residents, per capita net income of rural residents and overall Theil Inequality Index for China, and independent variables, depth of credit, depth of direct financing and depth of insurance. Next, multiple non-linear regression is introduced to build the model. With the method of unit root test and co-integration test, some equations are given to show the clear relationship among the variables.

Findings

The empirical results indicate that the development of credit market does not have a strong relationship both with the growth of income and income inequality. While the development of both the direct financing market and the insurance market is closely related to the growth of income and income inequality.

Originality/value

The results of this paper suggest that the protection of the rights and interests of medium-sized investors is the key for the capital market. Meanwhile, the insurance market should be encouraged to expand in both breadth and depth, which helps to take full advantage of its functions. As for the credit market, more resources should be allocated to those who need them most the small- and medium-sized enterprises, which will contribute to the growth of the income for the majority and narrowing the income gap.

Details

Grey Systems: Theory and Application, vol. 4 no. 3
Type: Research Article
ISSN: 2043-9377

Keywords

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