The loss of rural branches may affect access to deposits for the rural poor.
Carrizosa et al. (1996) say that Argentina has too many bank branches and that new
owners should be allowed to close unprofitable branches of provincial banks, many of
which were built for political reasons or to capture the inflation tax. In fact, more
branches closed before privatization than after. For example, public banks lost 102
branches (6 percent of their total) in the first six months of 1995, while private banks
added 33 branches. Most new owners are bound by covenants to keep all branches open
for a few years, with or without profits. This could increase access in the long term if
new owners, in an effort to cut losses, experiment with technology in the zombie
branches. Thus privatization is both a threat and an opportunity. Without new
technology, many rural branches will close in a few years. The current moratorium,
however, gives new owners a selfish reason to experiment with new technology.