Black-Owned Banks: Issues and Recommendations

Duker, Jacob M.; Morton, T. Gregory

doi:10.2307/41164547

Cited by 4 publications

(3 citation statements)

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“…First, although BOBs are most closely associated with high poverty communities (see Table 2), we do not have direct measures of the size of average checking account deposits (this information is not provided in the FDIC Call Reports), and the foreign and balance inquiry fee results may represent an attempt to cover the fixed costs of servicing small accounts held by liquidity constrained customers at BOBs. This reflects the assertions of Price (1995) and Duker and Morton (1974) who argue that BOBs are most likely to gain footholds in niche markets that are not as attractive to non-MOBs. Second, the BOB findings fit the Loss leader hypothesis, with fees applying to potential customers (i.e., the surcharge) competitive with other banks, but fees applying to current customers significantly higher.…”

Section: Discussionsupporting

confidence: 61%

ATM Fees at Black and Hispanic Owned Single Market Banks: A Comparative Analysis

Kashian

McGregory

Drago³

2016

The Review of Black Political Economy

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This paper presents evidence regarding three types of ATM fees: foreign fees charged for use of a non-bank ATM by the bank's customers, surcharges for use of bank ATMs by non-customers, and balance inquiry charges for the bank's own customers. It is hypothesized that, among single market banks, fees will be positively correlated with bank size, a lack of market competition, market penetration by multimarket banks, banks serving low income communities, and Black owned banks (BOBs) and Hispanic owned banks (HOBs), although banks may try to confuse depositors with fees that exhibit a low correlation, or may set low surcharges as part of a loss leader strategy. A 2013 sample of approximately 1500 single market banks, including 21 Black owned banks (BOBs) and 19 Hispanic owned banks (HOBs) is used for correlation and regression analyses. It is found that BOBs charge an average of $0.50 higher foreign fees, and are more likely to charge balance inquiry fees. We also find that larger banks tend to charge higher fees, and that banks may set higher fees where they serve disadvantaged communities of color. Surprisingly, market competition is never significantly associated with ATM fees, and there is minimal correlation across fees, and both results are consistent with banks setting fees strategically to confuse customers.

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Section: Discussionsupporting

confidence: 61%

ATM Fees at Black and Hispanic Owned Single Market Banks: A Comparative Analysis

Kashian

McGregory

Drago³

2016

The Review of Black Political Economy

View full text Add to dashboard Cite

show abstract

“…The service which minority financial institutions can play may be magnified by the much-discussed inability of minority communities to obtain financing from nonminority financial institutions for business capital investment and-of more recent concern-for housing capital investment. •"•See [1], [4], [6], [7], [10], [11] and [13].…”

mentioning

confidence: 99%

“…Numerous studies have been conducted on the financial viability of minority commercial banks (see [1], [2], [3], [4] , [10] and [11]), but minority S&Ls have increased in both number and total assets at faster rates than minority commercial banks since 1970.…”

mentioning

confidence: 99%