Posted in Finance, Accounting and Economics Terms, Total Reads: 350
Definition: Interstate Banking
This term is largely used in the US context. The banking expansion in mid 1980’s led to the expansion of banking across states in the United States. Legislations that were passed, allowed the banks to acquire banks out of their states on a reciprocal-basis with other states and their corresponding banks. This interstate banking has then led to the rise of regional and national banking chains across the country.
Broadly speaking, the interstate banking saw 2 significant phases –
1. Starting in the 1980s, interstate banking commences with regional banks. These large companies were formed as a result of many small banks that merged together.
2. That followed by the legislature allowing mergers with banks in any other state. This however, was subject to certain capital requirements as per the Reigle-Neal Interstate Banking and Branching Efficiency Act
A direct outcome of these occurences was national banking chains.