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

The restructuring of financial markets and financial institutions through b ank mergers has been accompanied in many countries by concerns about the re sulting 'geography of finance'. In Canada, two proposed mergers involving f our of the largest banks have raised concerns about the possible impacts of the proposed mergers on the access to financial institutions in rural Cana da. This paper assesses the potential impact of the proposed mergers on the geography of finance in rural communities in British Columbia. The methodo logical choices which must be made to frame such an anlysis are discussed a nd include choices related to the definitions of 'accessibility', the 'indu stry', a 'competitive industry', a 'bank branch' and a 'community'. A new I ndex is devised to measure the vulnerability of rural communities to post-m erger bank branch closures. It is concluded that the bank mergers will, if approved, have significant negative impacts for the accessibility of the ba nking system in rural British Columbia. It is also suggested that Canada ne eds to examine establishing a wider regulatory framework which addresses th e issue of accessibility on a longer term basis.