Bank Branch Expansion and Financial Inclusion: Evidence from Selected Commercial Banks in India

Banking Industry plays an important role by expanding its branches in the growth and development of an economy. An access to finance is essential not only for maintaining and improving the social and economic status of a person, but also is essential for meeting all needs. Without having an account people do not save for future requirements, or avoid high interest payments. In this study an attempt has been made to measure the financial inclusion status with an explanatory variable of bank branch including off site ATMs and two endogenous variables of deposit accounts and credit accounts which measure financial inclusion. The result reveals that both the bi-variate regression results are significant with common set of an explanatory variable. As branches are the primary interface between public and formal deposit and credit accounts, in the second part of the analysis the primary factors of opening a new branch have also been examined. It clearly indicates that presence of branch and ATMs have significant impact on financial inclusion. The results also reveals that expansion of branch significantly depends on the six variables of one lag period value of deposit to GDP; deposit per branch; credit to GDP; credit per branch; branch per thousand square kilometre; and average population per branch.