Commercial bank locations and “banking deserts”: a statistical analysis of Milwaukee and Buffalo

Although Internet banking is now able to perform many of the functions associated with physical bank branches, these locations still play important roles within their neighborhoods. This is particularly true for low-income, inner-city areas, which often have relatively few traditional banks. This study compares the cases of Milwaukee and Buffalo, both northern “Rust Belt” cities that have experienced manufacturing and population decline. Using both GIS and statistical analysis at the block group level, we confirm the presence of inner-city “cold spots” in both cities using statistical measures. We also find that both bank density and distance are significantly correlated with income and other demographic and economic variables. Statistical tests show that banking “deserts” are poorer and less white than other block groups. Regression analysis shows that for Buffalo, but not Milwaukee, the number of banks in an area is significantly related to income, distance from the CBD, and population density; the vacancy rate is significant while racial makeup is not.