In this paper we investigate whether the heterogeneity in internet banking adoption by the household sector plays a role in determining changes in the number of bank branches in local credit markets. More specifically, we checked whether Italian banks modified their branch network at the province level during the period 2012-15 in response to differences in the diffusion of digital banking services among their customers at the beginning of the period.
By resorting to data at local market (province) and bank level, the analysis shows that, other things being equal, during the period 2012-15 the reduction in the number of bank branches was more intense for those local markets and banks where the diffusion of digital banking services was higher in 2012. On the contrary, we do not detect a significant impact of the same variable on the change in the average size of bank branches in the time interval 2012-15.
