The California Bankers Association and Beacon Economics Release California Economic Impact Report
Study measures the significant benefits created by banks doing business in California
The CBA and Beacon Economics have released a report, “The Economic Impact of Banks: Measuring the Benefits in California,” which examines the critical role banks play in supporting California’s economy and the communities where they do business. The report is authored by Chris Thornberg, Ph.D., founding partner, and Jordan Levine, economist and director of economic research, at Beacon Economics.
The report examines and identifies a number of direct economic impacts banks have, as well the considerable contributions banks make to California’s economy through what the report’s authors refer to as indirect effects. Key findings include:
- Banks doing business in California support $103 billion of California’s economic output.
- Bank operations generate significant state and local tax revenues through income and sales taxes totaling $5.3 billion annually.
- According to the Bureau of Labor Statistics, in 2011 California banks employed nearly 117,000 workers, and through indirect and induced effects, support an additional 236,000 jobs. Preliminary figures for first the part of 2012 indicate the banking sector directly employed more than 121,000 workers.
- Compared to 2011, through September of 2012, banks had increased lending by $19.1 billion (1). The increase in lending supported $36 billion of economic output and an additional 162,000 jobs beyond the jobs and economic output supported by banking operations in the state.
- Banks generously support education, community and economic development, health and social services, and many other causes through charitable contributions. In 2011, a subset of banks operating in California reported charitable contributions of more than $110 million, and employees of those banks invested more than 600,000 of volunteer hours.
“The report demonstrates that California banks clearly play a vital role supporting the state’s economy and the communities where they do business,” said Rodney Brown, president and CEO of the California Bankers Association. “In addition to their important core function of taking deposits and extending credit to help our economy function and grow, banks have a significant beneficial impact on the economy through their own business activities. Hiring employees, leasing office space, investing in business infrastructure and purchasing supplies all generate substantial economic output for the state.”
(1) Due to the way the FDIC collects data on bank lending, only banks headquartered in California are represented in the FDIC lending data analyzed in this report. Given that many non-California headquartered banks such as Bank of America, Citibank, J.P. Morgan Chase and U.S. Bank and others maintain a large presence in the state, these figures largely understate the overall quantity of credit extended in California.
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