Assessing a Decade of Interstate Bank Branching

46 Pages Posted: 20 Apr 2007

See all articles by Tara Rice

Tara Rice

Bank for International Settlements (BIS)

Christian A. Johnson

Widener University - Commonwealth Law School

Date Written: March 2007

Abstract

U.S. banking regulation has historically prohibited the ability of a bank to open or own a branch located outside of its home state, commonly referred to as interstate branching. Only since the passage of the Riegle-Neal Interstate Banking and Branching Efficiency Act (IBBEA) in 1994 have banks have been able to engage in interstate branching, though subject to state restrictions. Despite IBBEA's removal of branching barriers, it still allowed the states to impose restrictions on the entry of out-of-state branch offices. This article describes the changes in Federal and state interstate branching law since passage of IBBEA and reviews how initial (1994-1997) and evolving (1998-2004) interstate branching laws affect out-of-state branch growth. It concludes that anticompetitive state provisions restricted out-of-state growth when those provisions were more restrictive than the provisions set by IBBEA or by neighboring states.

Keywords: Riegle-Neal Interstate Banking and Branching Efficiency Act, interstate branching, out-of-state entry

JEL Classification: G11, G28

Suggested Citation

Rice, Tara and Johnson, Christian A., Assessing a Decade of Interstate Bank Branching (March 2007). FRB of Chicago Working Paper No. 2007-03, Available at SSRN: https://ssrn.com/abstract=981214 or http://dx.doi.org/10.2139/ssrn.981214

Tara Rice (Contact Author)

Bank for International Settlements (BIS) ( email )

Centralbahnplatz 2
Basel, Basel-Stadt 4002
Switzerland

Christian A. Johnson

Widener University - Commonwealth Law School ( email )

3800 Vartan Way
Harrisburg, PA 17110-9380
United States

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