IDEAS home Printed from https://ideas.repec.org/a/bla/ijurrs/v47y2023i6p881-898.html
   My bibliography  Save this article

FRINGE FINANCIAL ECOLOGIES AND PLACE‐BASED EXCLUSION: A Tale of Two Cities

Author

Listed:
  • Ian Dunham
  • Alec Foster

Abstract

Access to safe and affordable financial services is essential to the economic well‐being of individual households and entire urban neighborhoods. However, prior research raises concerns about spatial inequities in the distribution of brick‐and‐mortar financial services offerings—either mainstream financial institutions or alternative ‘fringe’ financial service providers—and the resulting implications for financial inclusion and social justice. This study uses a novel method to identify fringe financial ecologies that captures the recent tandem processes of abandonment by mainstream financial institutions and the proliferation of alternative financial service providers. We explore how fringe financial ecologies potentially overlap existing inequalities of race, class and subprime mortgage lending in two US metropolitan areas, Los Angeles, California, and Miami, Florida. Our results raise concerns that communities of color, low‐income neighborhoods and otherwise vulnerable segments of the population are disproportionately at risk of both financial exclusion and predatory targeting. We find that fringe financial ecologies are associated with a high prevalence of subprime mortgage lending. The results advance an understanding of financial ecologies that raises awareness about place‐based financial exclusion as a form of systemic racism in the broader context of the national reckoning with racial justice in the US.

Suggested Citation

  • Ian Dunham & Alec Foster, 2023. "FRINGE FINANCIAL ECOLOGIES AND PLACE‐BASED EXCLUSION: A Tale of Two Cities," International Journal of Urban and Regional Research, Wiley Blackwell, vol. 47(6), pages 881-898, November.
    • Handle: RePEc:bla:ijurrs:v:47:y:2023:i:6:p:881-898
    DOI: 10.1111/1468-2427.13155
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/1468-2427.13155
    Download Restriction: no
    File URL: https://libkey.io/10.1111/1468-2427.13155?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Bhutta, Neil, 2014. "Payday loans and consumer financial health," Journal of Banking & Finance, Elsevier, vol. 47(C), pages 230-242.
    2. Terri Friedline & Ian M. Dunham & Megan O'Brien, 2019. "The Financial Services Environment and Schools' Savings Rates in the San Francisco Kindergarten to College Program," Journal of Consumer Affairs, Wiley Blackwell, vol. 53(4), pages 1797-1824, December.
    3. repec:rre:publsh:v:34:y:2004:i:2:p:191-205 is not listed on IDEAS
    4. Gordon L. Clark, 2014. "Roepke Lecture in Economic Geography—Financial Literacy in Context," Economic Geography, Taylor & Francis Journals, vol. 90(1), pages 1-23, January.
    5. Raj Chetty & Nathaniel Hendren & Maggie R Jones & Sonya R Porter, 2020. "Race and Economic Opportunity in the United States: an Intergenerational Perspective [“Intergenerational Mobility of Immigrants in the US Over Two Centuries,”]," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 135(2), pages 711-783.
    6. repec:rre:publsh:v:40:y:2010:i:1:p:53-69 is not listed on IDEAS
    7. Andrew Leyshon & Paola Signoretta & David Knights & Catrina Alferoff & Dawn Burton, 2006. "Walking with Moneylenders: The Ecology of the UK Home-collected Credit Industry," Urban Studies, Urban Studies Journal Limited, vol. 43(1), pages 161-186, January.
    8. Thomas Piketty & Emmanuel Saez, 2003. "Income Inequality in the United States, 1913–1998," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 118(1), pages 1-41.
    9. Terri Friedline & Zibei Chen, 2021. "Digital redlining and the fintech marketplace: Evidence from US zip codes," Journal of Consumer Affairs, Wiley Blackwell, vol. 55(2), pages 366-388, June.
    10. Julie Birkenmaier & Qiang Fu, 2018. "Household Financial Access and Use of Alternative Financial Services in the U.S.: Two Sides of the Same Coin?," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 139(3), pages 1169-1185, October.
    11. Robin Prager, 2014. "Determinants of the Locations of Alternative Financial Service Providers," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 45(1), pages 21-38, August.
    12. J. Birkenmaier & Q. J. Fu, 2019. "Does Consumer Financial Management Behavior Relate to Their Financial Access?," Journal of Consumer Policy, Springer, vol. 42(3), pages 333-348, September.
    13. Burkey, Mark L. & Simkins, Scott P., 2004. "Factors affecting the location of payday lending and traditional banking services in North Carolina," MPRA Paper 36043, University Library of Munich, Germany.
    14. Goodstein, Ryan M. & Rhine, Sherrie L.W., 2017. "The effects of bank and nonbank provider locations on household use of financial transaction services," Journal of Banking & Finance, Elsevier, vol. 78(C), pages 91-107.
    15. Anping Chen & Marlon Boarnet & Mark Partridge & Christopher S. Fowler & Jane K. Cover & Rachel Garshick Kleit, 2014. "The Geography Of Fringe Banking," Journal of Regional Science, Wiley Blackwell, vol. 54(4), pages 688-710, September.
    16. Robert B. Avery & Raphael W. Bostic & Paul S. Calem & Glenn B. Canner, 1997. "Changes in the distribution of banking offices," Federal Reserve Bulletin, Board of Governors of the Federal Reserve System (U.S.), vol. 83(Sep), pages 707-725, September.
    17. Paul Mohai & Robin Saha, 2006. "Reassessing racial and socioeconomic disparities in environmental justice research," Demography, Springer;Population Association of America (PAA), vol. 43(2), pages 383-399, May.
    18. Gary Dymski, 2005. "Financial Globalization, Social Exclusion and Financial Crisis," International Review of Applied Economics, Taylor & Francis Journals, vol. 19(4), pages 439-457.
    19. Lisa Servon, 2017. "Are Payday Loans Harmful To Consumers?," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 36(1), pages 240-248, January.
    20. Smith, Tony E. & Smith, Marvin M. & Wackes, John, 2008. "Alternative financial service providers and the spatial void hypothesis," Regional Science and Urban Economics, Elsevier, vol. 38(3), pages 205-227, May.
    21. Langley, Paul, 2009. "The Everyday Life of Global Finance: Saving and Borrowing in Anglo-America," OUP Catalogue, Oxford University Press, number 9780199573967, Decembrie.
    22. Terri Friedline & Nancy Kepple, 2017. "Does Community Access to Alternative Financial Services Relate to Individuals’ Use of These Services? Beyond Individual Explanations," Journal of Consumer Policy, Springer, vol. 40(1), pages 51-79, March.
    23. Lisa Servon, 2017. "Are Payday Loans Harmful To Consumers? Response To Horowitz," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 36(1), pages 255-258, January.
    24. Gordon L. Clark, 2014. "Roepke Lecture in Economic Geography—Financial Literacy in Context," Economic Geography, Clark University, vol. 90(1), pages 1-23, January.
    25. Justin P. Steil & Len Albright & Jacob S. Rugh & Douglas S. Massey, 2018. "The social structure of mortgage discrimination," Housing Studies, Taylor & Francis Journals, vol. 33(5), pages 759-776, July.
    26. Marvin Smith & John Wackes & Tony Smith, 2013. "A note on alternative financial service providers and the spatial void hypothesis," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 51(2), pages 575-591, October.
    27. Drew Dahl & Michelle Franke, 2017. "\\"Banking Deserts\\" Become a Concern as Branches Dry Up," The Regional Economist, Federal Reserve Bank of St. Louis, vol. 25(2).
    28. Friedline, Terri & Elliott, William & Chowa, Gina A.N., 2013. "Testing an asset-building approach for young people: Early access to savings predicts later savings," Economics of Education Review, Elsevier, vol. 33(C), pages 31-51.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Megan Doherty Bea, 2023. "Relational foundations of an unequal consumer credit market: Symbiotic ties between banks and payday lenders," Journal of Consumer Affairs, Wiley Blackwell, vol. 57(1), pages 320-345, January.
    2. Zibei Chen & Terri Friedline & Catherine M. Lemieux, 2022. "A National Examination on Payday Loan Use and Financial Well-being: a propensity score matching Approach," Journal of Family and Economic Issues, Springer, vol. 43(4), pages 678-689, December.
    3. Katharina Allinger & Elisabeth Beckmann, 2021. "Prevalence and determinants of nonbank borrowing in CESEE: evidence from the OeNB Euro Survey," Focus on European Economic Integration, Oesterreichische Nationalbank (Austrian Central Bank), issue Q1/21, pages 7-35.
    4. Eoin McLaughlin & Rowena Pecchenino, 2022. "Fringe banking and financialization: Pawnbroking in pre‐famine and famine Ireland," Economic History Review, Economic History Society, vol. 75(3), pages 903-931, August.
    5. Goodstein, Ryan M. & Rhine, Sherrie L.W., 2017. "The effects of bank and nonbank provider locations on household use of financial transaction services," Journal of Banking & Finance, Elsevier, vol. 78(C), pages 91-107.
    6. Megan Doherty Bea & K. Bley, 2022. "(Un)conditional consumer protections in high‐cost lending regulation: Impacts on local lending geographies," Journal of Consumer Affairs, Wiley Blackwell, vol. 56(4), pages 1561-1596, December.
    7. Ryan M. Goodstein & Alicia Lloro & Sherrie L.W. Rhine & Jeffrey M. Weinstein, 2021. "What accounts for racial and ethnic differences in credit use?," Journal of Consumer Affairs, Wiley Blackwell, vol. 55(2), pages 389-416, June.
    8. Hyoung Jun Kim & Bo Kyeong Lee & So Young Sohn, 2020. "Comparing spatial patterns of sole proprietorship and corporate payday lenders in Seoul, Korea," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 64(1), pages 215-236, February.
    9. Asta Zokaityte, 2018. "The UK's Money Advice Service: Edu†Regulating Consumer Decision†Making," Economic Notes, Banca Monte dei Paschi di Siena SpA, vol. 47(2-3), pages 387-412, July.
    10. Terri Friedline & Nancy Kepple, 2017. "Does Community Access to Alternative Financial Services Relate to Individuals’ Use of These Services? Beyond Individual Explanations," Journal of Consumer Policy, Springer, vol. 40(1), pages 51-79, March.
    11. Scott W. Hegerty, 2016. "Commercial bank locations and “banking deserts”: a statistical analysis of Milwaukee and Buffalo," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 56(1), pages 253-271, January.
    12. Scott Hegerty, 2016. "Commercial bank locations and “banking deserts”: a statistical analysis of Milwaukee and Buffalo," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 56(1), pages 253-271, January.
    13. Terri Friedline & Zibei Chen, 2021. "Digital redlining and the fintech marketplace: Evidence from US zip codes," Journal of Consumer Affairs, Wiley Blackwell, vol. 55(2), pages 366-388, June.
    14. Pankaj Kumar Maskara & Emre Kuvvet & Gengxuan Chen, 2021. "The role of P2P platforms in enhancing financial inclusion in the United States: An analysis of peer‐to‐peer lending across the rural–urban divide," Financial Management, Financial Management Association International, vol. 50(3), pages 747-774, September.
    15. Campos-Vazquez, Raymundo M. & Krozer, Alice & Ramírez-Álvarez, Aurora A. & de la Torre, Rodolfo & Velez-Grajales, Roberto, 2022. "Perceptions of inequality and social mobility in Mexico," World Development, Elsevier, vol. 151(C).
    16. Marina Gindelsky, 2022. "Do transfers lower inequality between households? Demographic evidence from Distributional National Accounts," Economic Inquiry, Western Economic Association International, vol. 60(3), pages 1233-1257, July.
    17. Vona, Francesco, 2023. "Managing the distributional effects of climate policies: A narrow path to a just transition," Ecological Economics, Elsevier, vol. 205(C).
    18. Scott W. Hegerty, 2022. "Banking Deserts," City Size, and Socioeconomic Characteristics in Medium and Large U.S. Cities," Papers 2203.03069, arXiv.org.
    19. Emil van Eck & Iris Hagemans & Jan Rath, 2020. "The ambiguity of diversity: Management of ethnic and class transitions in a gentrifying local shopping street," Urban Studies, Urban Studies Journal Limited, vol. 57(16), pages 3299-3314, December.
    20. Terri Friedline & Zibei Chen & So’Phelia Morrow, 2021. "Families’ Financial Stress & Well-Being: The Importance of the Economy and Economic Environments," Journal of Family and Economic Issues, Springer, vol. 42(1), pages 34-51, July.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:ijurrs:v:47:y:2023:i:6:p:881-898. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://www.blackwellpublishing.com/journal.asp?ref=0309-1317 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.