Loss of bank branches in rural counties hurts small-business owners, seniors and more - Entrepreneur Generations

According to new Federal Reserve research, 51 percent of the nation’s 3,114 counties had a net decline in the number of bank branches from 2012 to 2017, and rural counties with higher poverty rates or higher minority populations were disproportionately affected. The report attributed the reductions to banks consolidating because of the recession.

“A total of 794 rural counties lost a combined 1,553 bank branches over the five-year period, representing a decline of 14% in the number of institutions,”  Yuka Hayashi reports for The Wall Street Journal. “The drop was much greater than the 9% drop in the country’s 802 urban communities that also saw a decline.”

The decline likely left many rural residents without an easy, inexpensive way to access financial services. In rural counties, seniors, small-business owners, and those without transportation appear to be the hardest hit, Hayashi reports. Lack of reliable broadband internet access has exacerbated the problem, since many rural residents haven’t been able to take advantage of online banking services.

“The closing of local banks could mean for some communities the loss of a source of financial advice and civic leadership, the authors said,” Hayashi reports. “The impact could be particularly significant for small businesses, which could face reduced access to credit needed to maintain and expand their operations, the authors wrote. The Fed researchers pointed out that loan interest rates increase as the distance between a business and the local branch of its lender grows—a potential reason why most small businesses borrow from institutions with a local presence.”

The report’s authors urged lawmakers, banks and other stakeholders to consider solutions for affected counties, saying that without easy access to financial services, it’s difficult to build wealth, run a business, and achieve long-term financial stability, Hayashi reports.

from The Rural Blog https://ift.tt/2LfDcLc Loss of bank branches in rural counties hurts small-business owners, seniors and more - Entrepreneur Generations

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