Does the target market affect bank performance? Evidence from the geographic diversification of city commercial banks in China

Frontiers of Business Research in China

Table 3 Geographic diversification and bank performance: baseline result

Dependent variable	(1) ROA	(2) ROE	(3) NPL ratio	(4) Cost	(5) Market share
Panel A: 1–HHI
1–HHI	− 0.004^c (0.001)	− 0.064^a (0.037)	1.913^b (0.796)	0.005^a (0.003)	0.528^c (0.124)
Constant	0.005 (0.003)	0.099^c (0.010)	8.077^c (1.200)	0.021^c (0.007)	0.884^c (0.482)
N	933	933	933	933	933
R²	0.421	0.399	0.381	0.301	0.914
Panel B: Avg distance
Avg distance	−0.001^b (0.002)	−0.005^b (0.002)	0.011 (0.088)	0.001^b (0.003)	0.022^b (0.011)
Constant	0.004^c (0.001)	0.101^b (0.046)	7.847^c (1.318)	0.020^c (0.007)	−0.921^a (0.515)
N	933	933	933	933	933
R²	0.424	0.396	0.369	0.302	0.914
Panel C: Diversification dummy
Diversification dummy	−0.001 (0.001)	− 0.019^b (0.008)	0.675^b (0.293)	0.003^b (0.001)	0.055^c (0.040)
Constant	0.005^c (0.001)	0.104^b (0.046)	7.682^c (1.311)	0.020^c (0.006)	0.964^c (0.141)
N	933	933	933	933	933
R²	0.415	0.396	0.380	0.306	0.908
Year fixed effects	Yes	Yes	Yes	Yes	Yes
Bank fixed effects	Yes	Yes	Yes	Yes	Yes

Notes. Standard errors are robust, clustered at the bank-year level, and reported in parentheses. ^a, ^b, and ^c indicate significance at 10%, 5%, and 1% levels, respectively