Assessing the impact of proposed bank mergers on rural communities: A case study of British Columbia

The restructuring of financial markets and financial institutions through bank mergers has been accompanied in many countries by concerns about the resulting 'geography of finance'. In Canada, two proposed mergers involving four of the largest banks have raised concerns about the possible impacts of the proposed mergers on the access to financial institutions in rural Canada. This paper assesses the potential impact of the proposed mergers on the geography of finance in rural communities in British Columbia. The methodological choices which must be made to frame such an anlysis are discussed and include choices related to the definitions of 'accessibility', the 'industry', a 'competitive industry', a 'bank branch' and a 'community'. A new Index is devised to measure the vulnerability of rural communities to post-merger bank branch closures. It is concluded that the bank mergers will, if approved, have significant negative impacts for the accessibility of the banking system in rural British Columbia. It is also suggested that Canada needs to examine establishing a wider regulatory framework which addresses the issue of accessibility on a longer term basis.