The Research Evidence: What Is Known About Interstate Banking's Effects?
While serious research on the interstate banking phenomenon was virtually nonexistent before 1980, research in this field has increased significantly in recent years, particularly in the late 1980s and early 1990s. However, relative to most other controversial areas in banking, the volume of research focusing upon interstate banking still remains comparatively limited. Few issues can really be marked down as "decided," and the current body of evidence must be considered "thin" by conventional scientific standards. Certainly the restrictive nature of state and federal banking laws prior to passage of the 1994 Riegle-Neal Interstate Banking and Branching Efficiency Act in the United States helps to explain why so little has been resolved, research- wise, in the interstate banking field.
While looking at what research has been done in the interstate banking field, bear in mind that there are several different ways to measure the impact and influence of the interstate banking movement. For example, interstate banking may have a powerful impact on the internal organization and behavior of the individual banking firm but little impact outside the firm or upon the general public. Moreover, interstate banking might affect some performance dimensions of an individual bank, such as its profitability, but have almost no impact on other dimensions, such as its risk exposure. Similarly, interstate banking may or may not lead to improved bank service quality, service availability, operating efficiency, or depositor safety. Thus, it is not a simple matter to test what impact the growth of interstate banking might have on