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 the United States in creating banks owned and operated by the state has increased dramatically in recent years. In 2023/2024, legislation was introduced in eight states to start a state bank. In 2019, similar legislation was enacted in California for municipal banks. Chicago’s new mayor is evaluating plans for a city 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 addressing the financing needs for infrastructure, education, and underserved communities. 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. Claims by the BND as to the sources of their success are evaluated and rejected by the data. Three other factors are examined: one factor is not portable to other states; the latter two factors are merely taxpayer subsidies. There is no ‘secret sauce.’ Read the full paper here. Read the full paper here.