Question

how many banks does the United States have compared to other countries? That is, many more or far fewer? Briefly, what factors explain the great disparity?

Answer 1

             In the USA, obtaining bank license is not necessarily a Federal Issue ( as it is the issue with other countries). In USA, all 50 states can issue their own independent licenses and process is also simple. Compared to this with other countries, getting a bank license means qualifying the minimum base set by the financial regulator. Many countries do not allow community banks to be opened, that are literally say, single branch banks. But the US does, and that is why USA has around 8000+ banks.

              Though there are more than 8000 banks in USA, only few banks dominate banking industry. Banks which are ruling in USA, are as large as GDP of various countries. There are more opportunities of banks in developing countries than in USA as it is already a developed country. Many more laws were relaxed in USA in 1990's, after which many more mergers were happened. However, laws were written to prevent big banks from killing small banks. For example, f you go into a Chase branch office, you won't find any mention of JP Morgan, and if you go into a JP Morgan office, you won't see any sign of Chase. Even though it's one company, the laws are written so that you cannot do any cross-marketing.

              In the US both insurance companies and banks are licensed separately in each state. For banks, the States refused to allow banking across state lines. So up until recently the big NY banks could not open retail branches in any other State but NY. This gave birth to 10,000 local banks that then would work with the large "clearing" banks to for international business and also liquidity support. The big banks also bought loans from the local banks.