Banking Structure and Funds Availability in Non-metropolitan Areas

Increases in interstate and intrastate banking may have an impact on the availability of credit in nonmetropolitan communities. Past research provides substantial groundwork for additional study. To determine if the allocation of credit to nonmetropolitan regions in a branch banking state (Arizona)- differs from that in a unit banking state (Colorado), ordinary least squares regression analysis is utilized. Rapidly growing nonmetropolitan
areas in Arizona experienced greater credit availability than that experienced by similar communities in Colorado. However, slow growing communities in Arizona had lower loan-to-deposit ratios than would have existed under Colorado unit banking. Therefore, commercial bank allocation of loanable funds within nonmetropolitan areas may be more efficient where geographic restrictions have been relaxed.

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