Exploring the role of the counties in preventing financial exclusion in population shrinking territories

Abstract

Over the past decades, numerous European rural regions have witnessed a decline in population, accompanied by the loss of essential services, including financial services. This study examines the dynamic interplay of these processes in the comarcas (counties) of Aragon, Spain. Utilizing a panel dataset at the comarca level and a combination of multivariate statistical techniques, we investigate how sociodemographic and economic profiles interact with financial exclusion arising from the absence or scarcity of bank branches. The absence of bank branches and the saturation of the remaining depend on the evolution of economic dynamism, the ageing process, and the percentage of foreign population. Our findings have allowed us to discern that there are differences between comarcas. Specifically, we have identified three groups, which must face different problems with respect to the lack or scarcity of bank branches, as well as depopulation. This segmentation provides a detailed view of the regional reality and lays the groundwork for more precise and effective intervention strategies, highlighting the potential of comarca capitals as hubs for centralized banking services. This approach optimizes the use of limited resources and enhances the prospects for promoting sustainable development in Aragon and other rural regions of Europe.