Research Project
The ‘Secret Sauce’?: Understanding the Success of the State Bank Of North Dakota
- Principal Investigator
- Chirinko, Robert
- Research Area(s)
- Government Finance Research
Abstract
Interest in creating state banks in the United States has increased dramatically in recent years. In 2021 and again in 2022/2023, six states have introduced legislation to start a state bank. An important development in favor of a state bank is the long and impressive record of the only state bank in the United States, the Bank of North Dakota (BND). It has been in existence for over a century and has been very profitable in recent years. On the surface, these facts present a strong case for starting a state bank. To gain a better understanding of BND’s success and the possibilities for a successful state bank, this paper compares the financial performance of the BND to that of national commercial banks. The former comparison to large banks is appropriate since the BND is the 151st largest bank in the United States and both are members of the Federal Reserve System and chartered, regulated, and supervised by Office of the Comptroller of the Currency. Claims by the BND as to the sources of their success (low-cost deposits and lending acuity) are evaluated and rejected by the data. Other factors are examined. Read the full paper here.