FRINGE FINANCIAL ECOLOGIES AND PLACE‐BASED EXCLUSION: A Tale of Two Cities

Abstract

Access to safe and affordable financial services is essential to the economic well‐being of individual households and entire urban neighborhoods. However, prior research raises concerns about spatial inequities in the distribution of brick‐and‐mortar financial services offerings—either mainstream financial institutions or alternative ‘fringe’ financial service providers—and the resulting implications for financial inclusion and social justice. This study uses a novel method to identify fringe financial ecologies that captures the recent tandem processes of abandonment by mainstream financial institutions and the proliferation of alternative financial service providers. We explore how fringe financial ecologies potentially overlap existing inequalities of race, class and subprime mortgage lending in two US metropolitan areas, Los Angeles, California, and Miami, Florida. Our results raise concerns that communities of color, low‐income neighborhoods and otherwise vulnerable segments of the population are disproportionately at risk of both financial exclusion and predatory targeting. We find that fringe financial ecologies are associated with a high prevalence of subprime mortgage lending. The results advance an understanding of financial ecologies that raises awareness about place‐based financial exclusion as a form of systemic racism in the broader context of the national reckoning with racial justice in the US.