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The year 1992 will long be remembered in the state of Arkansas. With the election of our governor, Bill Clinton, as the nation's 42nd President, the state enjoyed exposure on a national and world scale.

It was also a banner year for the banking industry in the state. Another Arkansan, Bill Brandon, was elected President of the American Bankers Association. Also, over 98 percent of the 259 banks statewide showed year-end profits. Total profits for the year were $319,659,000.

However, the near-term future of Arkansas banking appears contradictory. It is evident that though the state's economy is, and has been, relatively stable over the past few years, we cannot escape the reality that it will continue to be influenced by the day to day changes in the U.S. and world economies - of which we have little, if any, control.

The greatest challenge as we venture into the 21st century is to succeed, despite the U.S. and world dynamics, in the creation of an environment conducive to the formation of the capital essential to fuel growth in the state. Arkansas banks can and must play a large role in the generation of that capital. However, to be effective we must remove the shackles that keep us bound to the past -- our unique and antiquated usury law.

Contrary to the belief held in certain quarters, Arkansas banks do not have an invisible hand which protects them from interest rate risk. Simply put, a bank is a business that must adapt and make changes necessary to remain profitable. The real question is can we do this in such a way as to maximize the benefits to the state as a whole?

Arkansas must operate on a level playing field as it relates to interest rates. Until that occurs this state shall remain capital poor and the odds of continued competitiveness in a rapidly condensing world market will remain long indeed.
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Title Annotation:Arkansas
Author:Bridges, Lunsford W.
Publication:Arkansas Business
Date:Aug 16, 1993
Previous Article:Workers' compensation.
Next Article:Infrastructure.

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