In 1836, the first year of statehood, the legislature created the Arkansas State Bank; and the Real Estate Bank, which was intended to promote the plantation system. Fraud, mismanagement, and the consequences of the financial panic of 1837 ruined both banks and led to the passage in 1846 of a constitutional amendment prohibiting the incorporation of any lending institution in Arkansas. Money grew scarce, with credit being rendered largely by suppliers and brokers to farmers and planters until after the Civil War (1861–65), when the prohibition was removed.
Arkansas had 178 insured banks in 2002. At the end of 2002, the state's insured banks had $34.7 billion in assets.
As of the early 1980s, Arkansas's usury law imposed a 10% ceiling on interest rates (one of the most rigid in the US); which the US Supreme Court upheld in 1981. The rise of the federal rate above that limit, beginning in mid-1979, caused a considerable outflow of capital from Arkansas. The Arkansas Usury Law was changed in December 1992 with the Interest Rate Control Amendment, which set the maximum interest rate on general loans at 5% above the Federal Reserve Discount Rate. The Arkansas Supreme Court interpreted the amendment to mean that the rate on consumer loans would be 5% above the discount rate, up to 17%. Although many institutions offered higher interest rates anyway, the ability to do so was formalized in the Financial Modernization Act of 1999. Opposition to usury came primarily from religious factions and labor unions, but low levels of investment during the 1990s motivated the Arkansas government to change the law.
Arkansas experienced weak economic conditions in 2001/02, and rising debt levels, slow income growth, and job losses contributed to a rise in personal bankruptcy filings. Arkansas ranked fourth in the nation in number of bankruptcy filings in 2002. Asset quality among Arkansas' insured banks remained a problem, with higher past-due loan levels. Median net interest margins (NIMs) (the difference between the lower rates offered to savers and the higher rates charged on loans) for Arkansas' insured institutions improved, however, due to the wide spread between short- and long-term interest rates.