Does bank branch expansion increase bank risk taking? ——Intermediary channels of loan-deposit spread

ABSTRACT

Based on the data of 197 banks in China from 2010 to 2020, this paper examines the impact of bank branch establishment on their associated risk taking, and explores the intermediary channel mechanisms of loan-deposit spread. The research findings are as follows: (1) Bank branch expansion increases bank risk taking. (2) The establishment of branches of commercial banks has significant heterogeneity characteristics on bank risk taking. (3) Branch expansion has significantly increased the level of bank risk taking through the increase of loan-deposit spread.

KEYWORDS:

• Bank branch
• branch expansion
• bank risk taking
• loan-deposit spread

JEL CLASSIFICATION:

• E51
• E52
• E58

Disclosure statement

No potential conflict of interest was reported by the author(s).

Additional information

Funding

This work was supported by the The Humanities and Social Sciences Research Planning Fund of the Ministry of Education [No. 20YJA790014].