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Interstate Banking: Experiences in Three Western States

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Report Type Reports and Testimonies
Report Date Dec. 30, 1994
Report No. GGD-95-35
Subject
Summary:

Supporters of a nationwide interstate banking law argue that geographic restrictions no longer make sense in today's integrated financial and credit markets and actually undermine the ability of U.S. banks to compete domestically and internationally. Opponents, however, fear that relaxing geographic restrictions could concentrate economic power among a relatively small number of banks. This report provides Congress and regulators with information on the potential impact on states of lifting geographic restrictions. GAO discusses the experiences of three western states--California, Washington, and Arizona--that have operated in an environment permitting interstate banking and in-state branching. GAO evaluates their experiences to determine whether these geographic laws have had any effect on the (1) market share and number of large banks, (2) viability of smaller banks, and (3) availability of credit to small businesses.

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