Bank branches are getting scarcer, especially in rural counties that are poor or have high minority populations

Branch banks are getting scarcer, especially in poor, rural places. According to new Federal Reserve research, 51 percent of the nation’s 3,114 counties had fewer bank branches in 2017 than in 2012, and rural counties with higher poverty rates or higher minority populations were disproportionately affected. The report attributed the reductions to banks consolidating after the Great Recession.

“The closing of local banks could mean for some communities the loss of a source of financial advice and civic leadership, the authors said,” Yuka Hayashi writes 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 Fed  found that 794 rural counties lost a total 1,553 bank branches during the period, "representing a decline of 14% in the number of institutions," Hayashi reports. The decline likely left many rural residents without an easy, inexpensive way to get financial services. In rural counties, seniors, small-business owners, and those without transportation appear to be the hardest hit, she writes. 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.

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 notes.