May 22, 2026, Brookings, How States Can Incentivize Local Investing To Find New Capital For Businesses And Housing
The U.S. began to witness considerable consolidation (i.e., mergers) of banking institutions and the rise of major regional banking networks in the 1980s, as deregulation permitted financial institutions to operate across state lines and expand their financial services.1 This consolidation reduced the geographic and social proximity of lenders to many communities. As a result, census-tract-level analysis of bank branch closings from 1999 to 2012 found that branch closings have a localized and persistent negative impact on small business credit access and lending.
The National Community Reinvestment Coalition’s most recent analysis of Federal Deposit Insurance Corporation (FDIC) bank branch data finds that while the rate of bank branch closures stabilized in 2024 and 2025 after the dramatic decline observed following the COVID-19 pandemic, the number of branches remains historically low. Between 2017 and 2025, the number of branches in operation shrank by 14.8%, from 86,469 to 73,649. These impacts are not even across communities: The Fed Communities and Federal Reserve Bank of Philadelphia’s Banking Deserts Dashboard and analysis found that while the most bank branch closures and growth of banking deserts occurred in higher-income, suburban, and mostly white neighborhoods, low-income and minority neighborhoods lost branches at a disproportionate rate between 2019 and 2023.
