September 14, 2009
North Carolina as a banking giant
When people think of North Carolina's economy, they think of tobacco, textiles, furniture and even technology and medicine. When people think of banking, New York and maybe San Francisco come to mind. But actually North Carolina and specifically Charlotte is the second largest banking center in the country. Why?
Dr. Mike Walden, North Carolina Cooperative Extension economist in the College of Agriculture and Life Sciences at N.C. State University, responds:
"That's a really good question, and one that I've gotten a lot recently because of, obviously, the financial situation, and people realizing Charlotte has really been hit by this economic downturn. It goes back to two things. One, North Carolina's rural character. We traditionally were a state with a lot of small towns, no big large city. So if you had a bank here and you wanted to make money, you had to have a lot of branches spread across the state, not just one. If you were in New York, you had a bank in New York City, well, you're going to make money there. So North Carolina's economy developed with a lot of small banking branches, if you will, across the state. The second thing, in the 1930s, most states became very suspicious of banks, and they put restrictions on the number of branches banks could have. North Carolina and our sister state South Carolina did not do that. And so what happened is we had, first, a tradition of banks with a lot of branches, then we had also the fact that because of our liberal banking rules, we had banks headquartered in Charlotte and they could have these branches spread across both states. Then, when starting in the 1990s, we saw the rules about banking change, and the nation allowed first regional, then nationwide banking, those banks in North Carolina, headquartered in Charlotte, were ready to go. They could take advantage of those rules. They had experience maneuvering and managing banks across geographical areas, and they went on a merger binge and grew into those big banks that, indeed, we have today."
Posted by Dave at September 14, 2009 08:00 AM