The year-long study titled “Perdido En La Traducción: The Opportunity in Financial Services for Latinos” also demonstrates for the first time that persuading households to keep their money in banks and credit unions could lower the risk of robberies and raise property values.
Nationwide, there is more than $169 billion floating outside the formal banking system attributed to unbanked households, of which $53 billion comes from unbanked Latino households.
“This study gives the financial services industry, policy makers and market watchers information they can use and a real measurement of the scope of this hidden market. At the same time, it not only represents a significant financial opportunity, but also highlights the wide-ranging benefits for communities,” says Greg Fairchild, executive director of the Tayloe Murphy Center and Darden professor.
The study focuses on unbanked Latino households in Virginia and North Carolina. Latinos are the fastest- growing multi-ethnic group in many states, including Virginia, as well as nationwide.
Many of the findings can also be applied nationally to any household that is unbanked, regardless of ethnicity, background, geographic location or length or status of residence.
California, Texas, New York, Florida and Georgia are the top five states for the greatest amount of money kept outside of banks and credit unions by such households, according to the FDIC’s full list of yearly income of unbanked households by state.
“Using rigorous statistical analysis, qualitative field research and case study, we focused on the challenges of serving Latinos and other unbanked households as well as how banks and credit unions can reach this market nationwide,” says Kulwant Rai, research director at the Tayloe Murphy Center.
On Friday, June 17, Rai will present the study for the first time in Los Angeles at the National Federation of Community Development Credit Unions’ 37th Annual Conference on Serving the Underserved.
In Virginia, the Tayloe Murphy Center found 39,000 unbanked Latino households, with an average yearly income of $23,500. That adds up annually to almost $917 million unbanked by Latino households.
Much of that unbanked money is serviced by community grocery stores and markets, called “Las Tiendas” in the report. Las Tiendas offer check-cashing, wire transfers and bill paying with significantly marked-up service fees.
For answers on how to capture those billions in deposits and provide unbanked households more control of their finances, Tayloe Murphy Center researchers examined a North Carolina-based credit union established in 2000 called the Latino Community Credit Union (LCCU).
LCCU was chosen because its membership is one of the fastest-growing of any credit union in the nation. From 2000 – 2009, the number of LCCU depositors soared from 917 to 53,073. It achieved its success through a strategy that makes Latinos feel comfortable and educates them on how banking services are beneficial.
Researchers found an added incentive in the credit union’s approach to banking; because of their tendency to carry cash, unbanked households, especially Latinos, are often the victims of violent robberies.
“I used to carry my money and hide it in small packets at home. It wasn’t until I was robbed at gunpoint with my son at my side that I realized I needed to put my money in a safer place,” says Roberto Maya, an LCCU member since 2000.
Maya says LCCU representatives made him feel welcome and spoke to him in Spanish. While he was initially concerned about acquiring debt, LCCU provided financial education workshops where he learned how to obtain his first loans.
“At LCCU, they helped me understand how things work and made me feel comfortable,” Maya says. “In the last 10 years, I built my credit history, bought my first home and started a painting business.”
Maya’s experience at LCCU is far from unique.
The Tayloe Murphy Center reviewed statistics from 1990 – 2008 that found each time LCCU opened a branch in North Carolina (in the counties of Durham, Mecklenburg, Wake, Guilford and Cumberland) the number of robberies dropped by an average of 57 per year, almost 4 percent in each county.
Further, the decline in crime led to a dramatic increase in property value in those same counties. The opening of LCCU branches from 2000 – 2008 is credited with raising property values by 4 percent compared to the total appreciation, or $9.8 billion.
“The study is about more than just showing banks and credit unions how to connect to this powerful and growing market,” says Fairchild. “At the Tayloe Murphy Center, we seek to conduct research that can create economic and community uplift and transform underserved areas and groups.”
For more information or to request an interview, please contact Olin Ericksen at firstname.lastname@example.org or call +1 434-979-2678.
Olin Ericksen | Newswise Science News
Europe’s Demographic Future. Where the Regions Are Heading after a Decade of Crises
10.08.2017 | Berlin-Institut für Bevölkerung und Entwicklung
Scientists reveal source of human heartbeat in 3-D
07.08.2017 | University of Manchester
Physicists at the University of Bonn have managed to create optical hollows and more complex patterns into which the light of a Bose-Einstein condensate flows. The creation of such highly low-loss structures for light is a prerequisite for complex light circuits, such as for quantum information processing for a new generation of computers. The researchers are now presenting their results in the journal Nature Photonics.
Light particles (photons) occur as tiny, indivisible portions. Many thousands of these light portions can be merged to form a single super-photon if they are...
For the first time, scientists have shown that circular RNA is linked to brain function. When a RNA molecule called Cdr1as was deleted from the genome of mice, the animals had problems filtering out unnecessary information – like patients suffering from neuropsychiatric disorders.
While hundreds of circular RNAs (circRNAs) are abundant in mammalian brains, one big question has remained unanswered: What are they actually good for? In the...
An experimental small satellite has successfully collected and delivered data on a key measurement for predicting changes in Earth's climate.
The Radiometer Assessment using Vertically Aligned Nanotubes (RAVAN) CubeSat was launched into low-Earth orbit on Nov. 11, 2016, in order to test new...
A study led by scientists of the Max Planck Institute for the Structure and Dynamics of Matter (MPSD) at the Center for Free-Electron Laser Science in Hamburg presents evidence of the coexistence of superconductivity and “charge-density-waves” in compounds of the poorly-studied family of bismuthates. This observation opens up new perspectives for a deeper understanding of the phenomenon of high-temperature superconductivity, a topic which is at the core of condensed matter research since more than 30 years. The paper by Nicoletti et al has been published in the PNAS.
Since the beginning of the 20th century, superconductivity had been observed in some metals at temperatures only a few degrees above the absolute zero (minus...
Researchers from the University of Miami (UM) Rosenstiel School of Marine and Atmospheric Science, the Italian Space Agency (ASI), and the Instituto Geofisico--Escuela Politecnica Nacional (IGEPN) of Ecuador, showed an increasing volcanic danger on Cotopaxi in Ecuador using a powerful technique known as Interferometric Synthetic Aperture Radar (InSAR).
The Andes region in which Cotopaxi volcano is located is known to contain some of the world's most serious volcanic hazard. A mid- to large-size eruption has...
16.08.2017 | Event News
04.08.2017 | Event News
26.07.2017 | Event News
16.08.2017 | Physics and Astronomy
16.08.2017 | Materials Sciences
16.08.2017 | Interdisciplinary Research