Why America has so many banks
Their numerousness can cause confusion—and brings both benefits and risks
AMERICA HAS a dizzying number of banks. In recent weeks, that has proved to be a source of confusion. After Signature Bank, based in New York City, was seized by regulators on March 12th, four other banks with the same name had to clarify that they had no link with the failure. When First Republic Bank, a California-based lender, secured a $30bn cash infusion just weeks before its own collapse, some traders mistakenly sold shares in the similarly named Republic First Bancorp, based in Philadelphia, sending its stock price tumbling by 28%. It is little wonder that America’s lenders get mixed up. There are more than 4,100 commercial banks in the country, according to the Federal Deposit Insurance Corporation (FDIC), compared with 353 in Britain and 261 in Germany. Why does America have so many banks?
From the May 27th 2023 edition
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