Banking for the Culture: Black-owned Banks as Cultural Assets during the Subprime Lending Boom
About the talk:
Today, black-owned banks are important financial resources challenging economic exclusion. Nevertheless, they do not associate strongly with local economic development. Some scholars argue this signals black-owned banks are ornamental, or ineffective responses to legacies of economic exclusion in black segregated neighborhoods. To engage these critiques, Bento draws on the dialectical theoretical concepts of cultural assets and structural deficits to examine the effectiveness of black-owned banks during the subprime lending boom—a period when bank practices exploiting a history of economic exclusion in black segregated neighborhoods intensify. Specifically, Bento analyzes administrative data from the Federal Deposit Insurance Corporation (FDIC) and the Home Mortgage Disclosure Act (HMDA) to assess whether black-owned banks associate with access to mortgage credit when the subprime lending boom peaks in 2006. Using negative binomial logistic regression models, she finds black-owned banks do not significantly associate with mortgage originations in 2006; but, neighborhoods with black-owned banks receive fewer subprime mortgage loans, compared to ones without them. As such, black-owned banks appear to effectively shield black segregated neighborhoods from the time period’s predation. Overall, findings imply black-owned banks support protective credit markets during periods of intensifying economic exclusion and exploitation. Bento has written up an article on this topic that is under review and is looking for feedback.
About the speaker:
Asia Bento is an assistant professor of sociology at the University of California, Irvine. Her research examines racism’s impact on economic outcomes. Broadly, she studies the intersection of race and racism, economic inequality, and urban sociology.