The Bank of North Dakota: A Model for Massachusetts and Other States?

24 Pages Posted: 23 Sep 2011

See all articles by Yolanda K. Kodrzycki

Yolanda K. Kodrzycki

Federal Reserve Bank of Boston - Research Department

Tal Elmatad

Federal Reserve Bank of Boston

Date Written: May 1, 2011

Abstract

In 2010, Massachusetts legislators considered whether to create a state-owned bank as a means to address concerns about credit availability and other economic challenges stemming from the financial crisis and Great Recession of 2007-09. In 2011 a commission was established to investigate the feasibility of setting up such an institution. This research report informs the work of that commission.

The report provides an in-depth examination of the only state-owned bank in the nation, the Bank of North Dakota (BND). It discusses BND’s history and current operations, and analyzes the degree to which the bank stabilizes the state economy, provides local businesses improved access to credit, augments the lending capacity of private banks, and contributes revenues to the state government. The authors conclude that, in recent years, BND’s most important role has been to serve as a lending partner for North Dakota’s numerous small banks, but that its willingness and capacity to offset a serious credit crunch has not been shown, owing to the comparatively limited stresses on North Dakota banks in the recent national crisis and economic downturn. The report estimates that the potential costs of starting up a state-owned bank in Massachusetts could be significant.

Keywords: State-Owned Bank, Public Banking, Bank of North Dakota

Suggested Citation

Kodrzycki, Yolanda K. and Elmatad, Tal, The Bank of North Dakota: A Model for Massachusetts and Other States? (May 1, 2011). FRB of Boston Public Policy Discussion Paper No. 11-2, Available at SSRN: https://ssrn.com/abstract=1932426

Yolanda K. Kodrzycki (Contact Author)

Federal Reserve Bank of Boston - Research Department ( email )

600 Atlantic Avenue
Boston, MA 02210
United States
617-973-3809 (Phone)

Tal Elmatad

Federal Reserve Bank of Boston ( email )

600 Atlantic Avenue
Boston, MA 02210
United States

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