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May, No. 238

What's behind the boom in bank branches across Illinois, particularly in Chicago? The authors explore the history of branch banking within the state and across the nation to help explain this recent trend and discuss its future implications.

Last Updated: 04/11/2007

The Branch Banking Boom in Illinois: A Byproduct of Restrictive Branching Laws

Erin Davis, Tara Rice

Bank branches, like coffee shops, have become a ubiquitous part of the American landscape. In Chicago’s commercial banking district, twelve banking offices now dot LaSalle Street between the Chicago River and the Chicago Fed, more than double the five coffee shops along this half-mile stretch. As of June 30, 2006, Illinois boasted 4,349 banking offices, two-thirds more than in 1994.2 This aggregate state growth is unusual, since the number of banking offices nationwide grew only 23% between 1994 and 2006. Politicians in Illinois have begun to take notice. The City of Chicago amended Chapter 17-3-0504-I of its zoning code in 2004 to require banks to apply for special use permits to build new banking offices in certain areas, and several Chicago suburbs have enacted similar restrictions. The authors explore the reasons behind the recent bank branching boom and discuss its implications.

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