The Functions of Australian Banks’ Branch Networks: The Diversification of Risks and Spatial Allocation of Capital

Andrew J. Seltzer*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

1 Citation (Scopus)

Abstract

This paper examines the consequences of branch banking for the Australian economy. There is little evidence to show that branching increased the stability of Australian banking. During the 1893 crisis, banks with more extensive branch networks, particularly those that had rapidly expanded their networks during the long boom of 1866-89, were more likely to suspend payments. However, it is shown that branching increased the availability of capital and provision of banking services in rural areas. This occurred because, unlike unit banks, which were tied to a specific location, branch banks could internally reallocate capital from urban to rural regions at low cost.

Original languageEnglish
Pages (from-to)338-361
Number of pages24
JournalAustralian Economic History Review
Volume58
Issue number3
DOIs
Publication statusPublished - Nov 2018
Externally publishedYes

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