The Study of Location Strategy for Bank through the Analysis of Inter-regional Financial Transaction Network

In this paper, authors attempt to shed light on the factors that influence the locations of bank branches in establishing a bank’s branch network from the angle of the network analysis. For this purpose, authors studied location strategy for bank through the analysis of inter-regional network using financial transaction data in Korea. The previous studies analyzed the locations of bank branches on the basis of their geographical characteristics.But, the significance of this study rests upon the fact that it endeavors to explore the location factors from a new perspective of the movement path of financial customers. For this analysis, the network between administrative districts, which form the unit of a location, was analyzed based on the financial transactional data. The important findings of this study are as follows. First, we found the factors that the income level, the spending level, the number ofbusinesses, and the size of workforce in the pertinent region were influence to the size of a bank’s market. Second, the network centrality index was found to have a significant effect on the locations of bank branches. The degree centrality was revealed to have a greater influence on the size of a bank’s market than does the closeness centrality. The results of this study suggest the needs for a new approach from the perspective of network in furtherance of other factors that have been considered important in the previous studies of the branch location strategies.