Why does America have so many banks?

Did you know there are over 4,100 commercial bank in the USA? In Britain there is only 353 and Germany only has 261.
In the 19th century, there were regulations that restricted where banks could operated, and these regulations varied from state to state. Some banks were permitted to open anywhere in their home state while other states banned branches altogether. The logic was to prevent banks from becoming to powerful. However, states were earning a significant about of money from dividends and taxes on chartered banks which created an incentive to avoid the expansion of out of state banks.
The 1970s saw deregulation, as well a new technology like the ATM.
Today, big banks control a large part of the banking industry in the USA holding 42% of assets versus 11% in 1990.
In 2018, Congress adjusted the asset thresholds which determine how strict regulatory oversight is. Given recent turmoil, Congress might lower the threshold at which additional scrutiny kicks in. Therefore, banks are likely strategizing if they want more or less assets.
Given the recent chaos in the banking industry, there will be even more consolidation.
Works Cited:
https://www.economist.com/the-economist-explains/2023/05/26/why-america-has-so-many-banks
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