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Relaxation of geographical restrictions on bank expansion was 'completed' in 1997 when Federal legislation - the Interstate Banking and Branching Efficiency Act (IBBEA) - permitted banks and bank holding companies to expand across state lines. This legislation seemingly ended the era of geographical restrictions on bank expansion that date back to the 19th Century (Kroszner and Strahan, 2007). In 1994, while most states allowed out-of-state bank holding companies to own their banks (interstate banking), there were almost no interstate branches.1 IBBEA, which was passed in 1994, allowed both unrestricted interstate banking (in effect in 1995) and interstate branching (in effect in 1997). The allowance of interstate branching was the watershed event of IBBEA.
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