Banks, alternative institutions and the spatial-temporal ecology of racial inequality in US cities

Abstract

Research has made clear that neighbourhood conditions affect racial inequality. We examine how living in minority neighbourhoods affects ease of access to conventional banks versus alternative financial institutions (AFIs) such as check cashers and payday lenders, which some have called predatory. Based on more than 6 million queries, we compute the difference in the time required to walk, drive or take public transport to the nearest bank versus AFI from the middle of every block in each of 19 of the largest cities in the United States. The results suggest that race is strikingly more important than class: even after numerous conditions are accounted for, the AFI is more often closer than the bank in low-poverty racial/ethnic minority neighbourhoods than in high-poverty white ones. Results are driven not by the absence of banks but by the prevalence of AFIs in minority areas. Gaps appear too large to reflect simple differences in preferences.