The Bank of North Dakota is a massive subsidy to the fossil fuel industry. A bulk of its below market lending has been to the fossil fuel industry. This is typical of government-owned banks, which tend to subsidize the powerful and connected. Additionally, much of the bank's credit risk is ultimately shifted to the federal government, particularly through its federally guaranteed student loans.
Research has been done that shows that higher government ownership of banks is associated with slower subsequent development of the financial system, lower economic growth, and, in particular, lower growth of productivity.
https://goo.gl/6PppqGAnother issue is that the vast majority of funding for the Bank of North Dakota comes from the state's deposits, much of which is generated from tax and fee revenue. The bank is able to offer below-market rate loans to borrowers because it pays the state less interest on its deposits.
This is essentially a hidden subsidy. Had North Dakota kept its deposits with private banks, it would have received more interest on its deposits. The setup therefore functions as a transfer from taxpayers to borrowers. Rarely is such a lack of transparency in the interests of the general public.
