3.2.1 Sources of finance

Retail banks have been traditionally barred from growing beyond a local presence. Since the early 1800s the US banking system has been highly fragmented. States chartered their own banks, and Congress, influenced by local interests, refused to charter national banks that could operate more extensively than the politically powerful local banks.1 All of this meant that companies seeking to grow at a national level in the US did not go to banks to borrow capital, but instead raised capital on the equity markets.2