Assessing a Decade of Interstate Bank Branching

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 (1994-97) 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.