This blog post updates our previous ones on bank closures here and here. As we have noted, advocates of APR price caps for non-bank loans often point to the fact that banks will pick up the slack as borrowers have their financial lifelines removed. This is demonstrably false, as we have seen repeatedly.
In fact, US bank retail branch closures had a second record-breaking year in 2021, breaking the previous record set in 2020 by an astonishing 38%, according to a recent report from S&P Global Market Intelligence. The report shows that U.S. banks shuttered 2,927 branches. This considers more than 1,000 branch openings and nearly 4,000 branch closings. According to the report,
Banks have accelerated plans to consolidate their branch footprints as the COVID-19 pandemic encouraged consumer adoption of mobile and digital channels. Further, banks have faced a tough operating environment with low interest rates pressuring margins and forcing a reconsideration of expenses.
S&P Global Market Intelligence has been tracking bank closures since 2014.
Graphic: S&P Global Market Intelligence
The radically decreasing number of bank branches in the community is an additional factor that points to the inability and unwillingness among banks to make safe and affordable small dollar loans.
For more on banks and small dollar lending, look at NILA’s Frequently Asked Questions, question 27.
Source: S&P Global