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Why does the US have a weak Mutual Savings Bank Sector?

​​Over the last three decades, mutual savings banks have experienced a precipitous decline in their role in the American financial system.  Dozens of savings banks have failed and hundreds have chosen to convert form their traditional “mutual” form into joint-stock institutions that are akin to commercial banks. The 82 mutual savings banks that remain in existence today account for less than 1% of the assets of the American banking system.

Their position was not always this weak. At their height in the late 19th century, mutual savings banks accounted for over a quarter of the assets in the American banking system. Why then, have mutual savings banks become so marginal in the American banking system today? What have caused their precipitous decline? While it is common to attribute the decline of mutual savings banks in the United States to the period of deregulation beginning in the 1980s, the inability of American savings banks to compete in a deregulated environment has deeper historical roots.


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To cite this article:

WADHWANI (Dan R.)(2011): Why Does the U.S. Have a Weak Mutual Savings Bank Sector?, ESBG Perspectives n°63, pp. 59-85.

Financial History
Daniel R Wadhwani
Assistant Professor of Management and Fletcher Jones Professor of Entrepreneurship
University of the Pacific