A new report issued by the William J. Hughes Center for Public Policy at Stockton University touts the important specific benefits that New Jersey could expect from starting its own state bank. The report recommends that Gov. Murphy implement both a feasibility study and a draft business plan to help a state bank hit the ground running.
Deborah M. Figart, PhD, Distinguished Professor of Economics writes:
"Every $10 million in new lending by the State Bank of New Jersey would yield an additional $16 - $21 million in state output (Gross State Product), raise state earnings by $3.8 - $5.2 million, add 60 – 93 new state jobs, and increase state value-added by roughly $9 – $12 million. ...
"Despite numerous accounts documenting the Bank of North Dakota's longstanding success, [currently the only Public Bank in the US], this exemplary model has only recently generated serious consideration by other states, including New Jersey."
The report describes key rationale for New Jersey's state Public Bank:
Access to capital is vitally important for the health, security, and well-being of all individuals and businesses in our State. They are the economic drivers that help New Jersey’s commerce run smoothly. The lack of accessible capital, as currently experienced due to the economic downturn, is exacerbating the economic hardships being faced by working families and businesses;</p<
By creating a State bank, the State is able to direct economic development policy initiatives in a responsive and efficient manner to benefit citizens of New Jersey;
The mission of the State Bank of New Jersey shall be to promote small businesses, fair educational lending, housing, infrastructure improvements, community development, economic development, commerce, and industry in New Jersey. In this role, the bank shall act as a funding resource in partnership with other financial institutions, economic development groups, and guaranty agencies. (Sections 2. a., b. and c.)
“The exiting empirical research demonstrates that state banks would increase total lending within a state rather than [take from] local lending by local community banks working within their communities. This can seem unexpected but lending is not a zero-sum game.”
In another article in NJ Spotlight, Figart recommends moving forward quickly:
"Should state officials and lawmakers find the public bank a workable idea for New Jersey, they need not wait for other states or cities to act and see how well their banks function.
“We already have examples of public agencies lending money, like NJ EDA (Economic Development Authority) and NJ HESAA (Higher Education Student Assistance Authority),” she said. “We, and other states, have plenty of experience.”