Abstract
This paper investigates the impact of the geographic concentration of branch networks on bank profitability in Switzerland. Exploiting the unique federalist fiscal structure of Switzerland, where communes set their own income taxes, we examine whether the tax burden of branch location moderates the relationship. Using a hand-collected dataset of branch networks of commercial banks, we find that geographic branch network concentration positively affects bank profitability but only when banks concentrate their branches in low-tax communes. This suggests that the proximity to wealthy clients, who are more likely to reside in low-tax areas, enhances bank profitability.