December 2014 (Revised July 2016)

Where Are All the New Banks? The Role of Regulatory Burden in New Charter Creation

Robert M. Adams and Jacob P. Gramlich


New bank formation in the U.S. has declined dramatically since the financial crisis, from well over 100 new banks per year to less than 1. Many have suggested that this is due to newly-instituted regulation, but the current weak economy and low interest rates (which both depress banking profits) could also have played a role. We estimate a model of bank entry decisions on data from 1976 to 2013 which indicates that at least 75% of the decline in new bank formation would have occurred without any regulatory change. The standalone effect of regulation is more difficult to quantify.

Revised paper: Accessible materials (.zip)

Original paper: PDF | Accessible materials (.zip)

Keywords: Bank entry, financial regulation

PDF: Full Paper

Back to Top
Last Update: June 26, 2020