What is it about?
This study presents a methodology that combines geographic information technologies and consumer behavior principles to define, delineate, and quantify the trade area (TA) of a bank branch within the context of mergers and acquisitions (M&A). The goal is to design an optimal distribution network tailored to the needs of financial institutions involved in M&A activities. The paper introduces a procedure for TA delimitation, grounded in a theoretical model supported by marketing and consumer behavior theories, focusing on proximity, purchase frequency, and product type. By focusing on a single bank branch, the study provides a detailed analysis of TA delineation as a key element in marketing strategy, exploring its role in establishing optimal distribution networks, particularly for financial institutions engaged in M&A. The proposed methodology enables more accurate delineation of TAs in M&A processes, mitigating the negative effects often overlooked by banks during mergers and acquisitions. This approach helps reduce the risk of financial exclusion for vulnerable clients, promoting social and economic equity and fostering a fairer, more cohesive society.
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Why is it important?
In the context of bank mergers and acquisitions, accurately defining the trade areas of bank branches is crucial for optimizing distribution networks. This study addresses a gap in the literature by highlighting TA delineation as a key element in marketing strategy. By integrating Geographic Information Science metrics into Location Science and proposing fragmentation analysis to quantify the spatial structure and configuration of TAs, the study offers a novel approach that departs from traditional practices. This methodology enables financial institutions to make informed decisions during M&A processes, reducing the risk of financial exclusion for vulnerable clients and promoting social and economic equity.
Perspectives
This research opens new avenues for understanding the spatial dynamics of bank branch networks during mergers and acquisitions. By combining geographic information technologies with consumer behavior principles, the study provides a comprehensive framework for delineating trade areas. The integration of fragmentation analysis into TA delineation offers a unique perspective on the spatial structure and configuration of trade areas, which can be applied to various contexts beyond banking, such as retail and service industries. Future research could expand on this methodology by applying it to multiple branches or different geographic regions to further validate and refine the approach.
Dr. María Dolores De-Juan-Vigaray
Universitat d'Alacant
Read the Original
This page is a summary of: Defining bank branch trade areas for optimal distribution networks in mergers and acquisitions, Managerial Finance, January 2025, Emerald,
DOI: 10.1108/mf-06-2024-0447.
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