On the evolution of the Italian bank branch distribution

The aim of this paper is to investigate the effects of institutional change on the evolution of the Italian bank branch distribution. As a consequence of the “liberalisation†of the late 1980s and early 1990s, banks were free to open new branches in their preferred locations, without the administrative control of the Bank of Italy operational until 1989. Another major consequence of the regime change has been a significant wave of consolidation events among banks. Our hypothesis is that these fundamental changes can account for the emergence of a power law tail as the outcome of self-organisation in a deregulated environment. From a methodological point of view, we follow a “systemic†approach with a focus on statistical properties of bank branch distribution identifying the banks' collective reaction to the changing institutional setting.