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Researcher Says Minority-Owned
Banks Boost Local Economy
October 4, 1999

This is the first in a series of articles during the month of October celebrating Asian Awareness Month.

When Wei Li arrived in Los Angeles several years ago to begin working on her doctorate, a well meaning colleague suggested she live in Monterey Park, a city that locals commonly referred to as a Chinese area. Li, who is now an assistant professor of geography and Asian-American studies at the UConn, did not choose to live in the community but has spent the past several years studying the San Gabriel Valley area where Monterey Park is located.

This summer, Li returned to Los Angeles to examine the way Asian-Americ an and Latino-owned banks facilitate the development of what she calls ethnoburbs, multiracial and multiethnic suburbs that have emerged in recent decades and typically contain both business and residential areas and many immigrant-owned businesses.

Li says ethnic minority residents in ethnoburbs tend to have more economic power, education and income than their counterparts in traditional ethnic enclaves like Chinatown, where residents tend to have a lower socioeconomic status.

This summer's research was an outgrowth of Li's earlier work with Gary Dymski, an associate professor of economics at the University of California, Riverside, and Yu Zhou, an assistant professor of geography at Vassar College.

In the earlier study, which was partially funded by the UConn Research Foundation's large faculty grant in 1998, the researchers used data released under the Home Mortgage Disclosure Act to analyze the lending patterns of Asian-American banks in the San Gabriel Valley and examined the density of Asian-American banks in the Valley. The study revealed that the San Gabriel Valley had a higher density of banks than the rest of Los Angeles County, because of the Asian-American banks in the region. The scholars also found that Asian-American banks had favored Asian-America n applicants, though the statistics didn't reveal any evidence of discrimination against other groups.

This summer, Li and a group of colleagues compared and contrasted the banking behavior of Asian-American and Latino-owned and offshore banks in Los Angeles County and examined what role they play in the development of ethnic communities and businesses. The research included oral interviews with bankers from 22 of the 23 Chinese-American banks headquartered in Los Angeles and small business owners who received loans from Asian-American and Latino-owned banks.

Li says the researchers' initial hypothesis was that these minority-own ed banks play a crucial role in the development of ethnoburbs and ethnic enclaves, because Asian-American and Latino customers, many of whom could get loans from mainstream banks, are more comfortable dealing with minority banks. Preliminary research results confirmed the hypothesis and also showed that minority-owned banks play a critical role in Southern California's society and economy.

In addition, Li says, the San Gabriel Valley's ethnoburb wouldn't have developed the way it did without the transnational capital that flows in and out of the region and has made it one of the most vibrant sub-economies in Los Angeles County during the past two decades.

The research results will be presented at next year's Association of American Geographers' annual meeting and the International Geographic Congress in Seoul, Korea.

Allison Thompson

This is the first in a series of articles during the month of October celebrating Asian Awareness Month.