Do bank branches always exert a positive impact? A perspective from commercial banks issuing wealth management products

As fintech advances rapidly, the traditional functions of bank branches are increasingly challenged. Based on a sample of 127 commercial banks covering 2015–2022, this study explores how bank branches affect banks’ wealth management capacities (WMC). We find that bank branches are negatively correlated with banks’ WMC, which suggests that bank branches erode banks’ competitive edge in the wealth management market. Mechanism analysis suggests that higher operating costs are a potential channel through which bank branches are negatively associated with banks’ WMC. The moderating effect suggests that the cost effect arising from bank branches is weaker among banks with higher digitalization levels. We also find that the negative effect of bank branches on banks’ WMC is more pronounced for state-owned banks and larger banks. This study provides implications for policymakers and bank investors.