Cashing in on Distress: The Expansion of Fringe Financial Institutions During the Great Recession

Research output: Contribution to journalArticle

Abstract

The Great Recession was a consequence of widening inequality and the growth of a tiered financial services system, in which the rich and the poor have access to vastly different tools for wealth accumulation. The spatial organization of these dynamics created neighborhoods vulnerable to predation on behalf of subprime lenders and other fringe service providers. This project seeks to understand the reproduction of institutional marginalization in consumer finance. Results show that racially isolated neighborhoods in New York City, where subprime lending and foreclosures were common, were uniquely vulnerable during the Great Recession and were communities where check cashing outlets (CCOs) sprouted, highlighting a mechanism for the reproduction of inequality over time. CCOs cost more per transaction than a checking account—potentially totaling tens of thousands of dollars over a career. The link between widening financial services inequality and the recession’s consequences provides a strong impetus for safety net and community investment policies.

Original languageEnglish (US)
Pages (from-to)663-696
Number of pages34
JournalUrban Affairs Review
Volume54
Issue number4
DOIs
StatePublished - Jul 1 2018

Fingerprint

financial services
recession
financial service
marginalization
finance
investment policy
foreclosure
predation
safety
lending
dollar
service provider
community
transaction
career
cost
organization
costs
city
services

Keywords

  • financial services
  • Great Recession
  • segregation

ASJC Scopus subject areas

  • Sociology and Political Science
  • Urban Studies

Cite this

Cashing in on Distress : The Expansion of Fringe Financial Institutions During the Great Recession. / Faber, Jacob.

In: Urban Affairs Review, Vol. 54, No. 4, 01.07.2018, p. 663-696.

Research output: Contribution to journalArticle

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