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Factors affecting the banking industry since the 1950s

California residents no doubt would agree that the banking industry has drastically changed since the 1950s. While some of the changes are not good, others have greatly improved the way that banking is done.

One big change is the fact that there are a lot less banks across the country nowadays. In 1955, there were more than 13,200 banks in existence, whereas there are roughly 5,300 banks in 2016. However, digital technology, interstate banking and the growth of its entire assets from $209 billion during 1955 to $15 trillion in 2016 mark the way the industry has significantly progressed.

Further, the total amount of equity tied up in the banking industry as of August 2016 is $1.7 trillion, whereas it was $15 billion in the 1950s. In addition, at that time, the nominal gross domestic product in the US was $426 billion; however, for 2015, that number has jumped to $17.9 trillion.

However, a major factor affecting the banking industry for the last six decades has been the striking change from offering general business loans to financing real estate acquisitions and developments. Back in the mid-1950s, banks handled more industrial and commercial loans than real estate loans. Then, in 1984, this trend reversed as banks started providing more real estate loans.

There are many risks involved in commercial real estate ventures. Besides changing market trends and a slowing economy, investors may encounter difficulties with the property's title and zoning requirements. Therefore, real estate investors might benefit by speaking with an attorney who could not only help with performing a title search and offering valuable legal advice pertaining to the particular property, but who could also help the investor avoid costly litigation.

Source: R Street, "'Commercial' bank is misnomer. 'Real estate' bank is more apt", Alex Pollock, Aug. 9, 2016

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