The Number Of U.S. Banks Has Declined Sharply Driven By Voluntary Mergers Between Unaffiliated Banks

April 1st, 2015
in econ_news

from the Kansas Fed

The number of U.S. banks has trended lower over the past 30 years, dropping from about 14,500 in the mid-1980s to 5,600 today. The number of banks declined for many reasons, such as failures during periods of crisis, consolidation spurred by the relaxation of state branching and national interstate banking restrictions, and voluntary mergers between unaffiliated banks. Since the end of the 2007-09 recession, voluntary mergers have been the primary reason for the decline.

Follow up:

Banks merge for a number of business-related reasons. Mergers allow banks to achieve economies of scale, enhance revenues and cut costs through operational efficiencies, and diversify by expanding business lines or geographic reach. Bank mergers can result in more efficient banks and a sounder banking system and thus benefit the economy, as long as banking markets remain competitive and communities' access to banking services and credit is not diminished.

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