The Relationship between the Number of Off-Line based Bank Branches and Bank Performance: Evidence from Korean Banks

This study examines the relationship between opening off-line based bank branch in local and foreign area and bank performance in terms of profitability and keeping deposit. Throughout the panel logit regression, main test results are as follows. First, opening branch in local area can contribute to improvement of bank profits and to keeping bank deposit, and this evidence is line with Pham, Talavera, Yang (2016), recent study confirming that non-monopolistic banks can lead to gaining the profits through opening branch. Second, the securement of foreign branch does not contribute to bank profits, and it rather brings about decreasing ROE against the results of Liang, Ching, Chan (2013). Third, opening foreign branch does not also show the positive function to increasing bank deposit. According to test results, the coefficient of holding branch in foreign countries is not statistically related with the change of deposit. The evidence is contrast to the result of Van der Westhuizen (2014). In conclusion, holding off-line based local branch in Korean banking industry with non-monopolistic status can helpful in enhancement of profitability and in increasing bank deposit in terms of expansion of face-to-face branch network. However, it is noteworthy that launching branches in foreign countries cannot contribute to bank performance.