Minority owned banks and efficiency revisited

Kashian, Russell; McGregory, Richard; Drago, Robert

doi:10.1007/s11123-017-0510-x

Cited by 8 publications

(6 citation statements)

References 47 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…Similarly, Kashian et al (2014b) find that Black-owned banks pay higher rates on certificates of deposit than other similar banks and suggest those payments are related to dual-objective banking. More importantly, Kashian et al (2017) found that MDI behavior varied across MDI types, opening the possibility of differences across HOB types as well.…”

Section: Background and Literature Reviewmentioning

confidence: 95%

“…The coincidence of MDIs tending to be community banks – so reliant on “soft” information – and locating in areas where they can utilize cultural affinity to gather “soft” information from low-income customers may provide MDIs with unique opportunities. Kashian et al (2017) argue that MDIs may either exploit monopoly power in these communities or engage in “dual-objective” banking, suffering some shortfall of profitability in order to facilitate community economic development. On net, they conclude that most MDIs tend to engage in dual-objective banking, consistent with Toussaint-Comeau and Newberger (2017) finding lower rates of ROAs among MDIs, relative to other banks in similar markets.…”

Section: Background and Literature Reviewmentioning

confidence: 99%

“…These differences suggest that wealth in the USA is more often found in Cuban communities and least often located in Mexican communities. Prior research suggests that banks operating in poor communities tend to experience below-average profitability (Kashian et al , 2017), which implies that the Mexican-owned HOBs may be least and the Cuban-owned HOBs most profitable.…”

Section: Background and Literature Reviewmentioning

confidence: 99%

See 2 more Smart Citations

The role of specific heritage among Hispanic-owned banks in America

Kashian

Kamal

Xue

2020

View full text Add to dashboard Cite

PurposeSpecific types of Hispanic-owned banks (HOBs), including those related to Brazilian, Cuban, Mexican or Puerto Rican heritage, have not be analyzed to date. There are important differences between the relevant communities, including geographic location, language barriers, population size and the importance of remittances to foreign nations. The analysis here sheds light on these differences.Design/methodology/approachHOBs with the Federal Deposit Insurance Corporation (FDIC)-designated minority-owned depository institution (MDI) designation are identified, along with bank ownership heritage. Financial data, a measure of market competition, and demographics of depositors from 2003 to 2017 are utilized in an exploratory analysis comparing banks by HOB type, with random effects regressions for the pre-collapse (2003–2006) and post-collapse (2009–2017) periods.FindingsAlthough each of the four types of HOBs serve Hispanic and poor communities, there are substantial differences. For example, Brazilian and Puerto Rican banks on the island held high levels of nonperforming loans (NPLs) post-collapse, with the Brazilian and Mexican banks expanding levels of risky commercial real estate (CRE) lending post-collapse, while the Cuban banks contracted CRE lending. Differences in terms of return on assets (ROAs), the cost of borrowed funds and the tier-1 risk-based capital ratio are also identified.Social implicationsHOBs, like Latinos in the USA, are culturally heterogeneous and likely operate in different ways depending upon the culture and economic circumstances of the communities where they operate.Originality/valueAlthough there is substantial research on MDIs, this is the first analysis which treats HOBs as culturally heterogeneous. Further research of this type is warranted.

show abstract

Section: Background and Literature Reviewmentioning

confidence: 95%

Section: Background and Literature Reviewmentioning

confidence: 99%

Section: Background and Literature Reviewmentioning

confidence: 99%

See 1 more Smart Citation

The role of specific heritage among Hispanic-owned banks in America

Kashian

Kamal

Xue

2020

View full text Add to dashboard Cite

show abstract

“…Moreover, Taiwan represents a newly industrialized nation, while South Africa would likely be characterized as a developing nation. Finally, Kashian et al () consider the efficiency of minority‐owned banks in the USA and the impacts of the Great Recession on minority‐owned banks.…”

Section: Literature Reviewmentioning

confidence: 99%

Cost Efficiency Analysis of Local Commercial Banks in Taiwan

Kashian

Lin

Xue

2019

Asian Economic Journal

Self Cite

View full text Add to dashboard Cite

This study uses a stochastic frontier analysis (SFA) model to evaluate the relative cost efficiency of commercial banks in Taiwan in the wake of liberalization. The model is estimated using data made available through Taiwan's Banking Bureau and Financial Supervisory Commission. With data from before and after the 2008 financial crisis, our central result is that banks affiliated with bank holding companies (BHC) have become increasingly more efficient. While unaffiliated banks have generally increased their efficiency, they have not kept pace with respect to efficiency gains. Secondary findings are that, independent of ownership structure, both balance sheet and income statement composition affect efficiency. In particular, bank efficiency increases with growth in loans and capital prices. We also find evidence that labor productivity is a key explanatory factor behind efficiency differences across banks. As a result, a policy recommendation is made that banks invest in maximizing worker productivity. Finally, in addition to the insights gained from this study we contribute to the general literature on both bank efficiency and the use of the SFA model by applying it to new data in a new setting.

show abstract

“…Previous studies yielded mixed results as to the lack of profitability of African American community banks (Brimmer, 1971; Clair, 1988; Edwards, 1977; Irons, 1971; Kashian, Mcgregory, & Drago, 2017; Lash, 2005; Pyatt, 1988). Issues range from management skill levels, disappearing markets, and poor loan performance to government-sponsored programs that remove the incentive to innovate, all of which place the survival of African American community banks in question.…”

Section: Introductionmentioning

confidence: 99%

Financial Viability: A Descriptive Study of African American Banks’ Efficiency

Young

2019

The Review of Black Political Economy

View full text Add to dashboard Cite

African American community banks appear to be losing ground in their communities. The number of African American community banks continued to trend downward during the past two decades, suffering closure of 12 banks. As of 2017, only 23 banks remain. This trend forces the question: “Do African American community banks possess adequate financial viability to serve their communities?” The survival of African American Community Banks between 2006 and 2017 was examined using the efficiency ratio as the key measure of their financial viability. Results showed that African American banks managed to produce 1 year where they outperformed the peer banks in managing assets to produce profit. The most glaring discovery was that it cost the African American banking sector close to or more than US$1 to generate US$1 of revenue. Findings suggest that African American community banks were unable or unwilling to control the components that contribute to how successful the bank used its assets and liabilities to generate income during the study period.

show abstract

Minority owned banks and efficiency revisited

Cited by 8 publications

References 47 publications

The role of specific heritage among Hispanic-owned banks in America

The role of specific heritage among Hispanic-owned banks in America

Cost Efficiency Analysis of Local Commercial Banks in Taiwan

Financial Viability: A Descriptive Study of African American Banks’ Efficiency

Contact Info

Product

Resources

About