Banking deserts are geographic areas where no banks exist within a 10 miles radius. The St. Louis Federal Reserve bank identified 1,132 banking deserts in the United States in 2014, 734 of which were in rural areas.
The phenomenon of banking deserts emerged in the aftermath of the federal deregulation of banks in the 1990s, following which many banks shut down branches that were generating low revenue — often in rural, less populated areas. In other cases, as large, national banks acquired and merged with small, local banks, bank branches became redundant due to mergers and acquisitions. As large banks acquired local and community banks, some branches closed, including many non-profitable ones in low income areas.
Another wave of widespread bank closures was observed after the financial crisis of 2008, when an estimated 5000 American bank branches shut down. The pandemic also resulted in branch closures and according to S&P Global, U.S. banks closed 3,324 bank branches nationwide in 2020.
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