European Central Bank publishes working paper finding bank branches in CESEE fell more than 30% from 2013 to 2021, with consolidation a main driver

The European Central Bank has published a working paper on the geography of banking in 10 Central, Eastern and Southeastern European countries, finding that bank branch networks contracted by more than 30% between 2013 and 2021 and that closures outpaced openings. The paper links the decline primarily to banking market consolidation through mergers and acquisitions, while also finding that profitability and local economic growth were associated with fewer closures. It also shows that closures were more common at both ends of the geographic spectrum, in highly urban areas and in very rural ones. Using a geocoded branch-level dataset, the paper reports that total branches across the 10 countries fell from 28,666 in 2013 to 19,499 in 2021, a net decline of 9,167 branches. The scale of debranching varied widely, from a 5.2% reduction in North Macedonia to a 58.7% drop in Hungary. Branch closures were widespread but uneven within countries, and the local competitive effect was non-linear: moderate clustering of branches reduced closure risk, but the likelihood of closure rose once competing branches in the local market reached nine or more. The paper finds no strong association between branch decline and digital access overall, and stresses that the analysis is exploratory rather than causal. The paper says future research could examine branch closures and openings jointly and assess how changing branch networks affect financial inclusion, access to finance, inequality and economic development in the region.