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Discussion Paper
The homeownership and financing experience in two Chicago minority neighborhoods
This article documents the homeownership and financing decisions made by Hispanic and Black households in two Chicago ethnic communities to help policy makers, financial institutions and community leaders better understand the homeownership process for these two minority groups. Based on our findings, several policy initiatives and programs are proposed to improve the quality of financial literacy and ultimately for Hispanic and Black households.
Discussion Paper
How effective were the financial safety nets in the aftermath of Katrina?
This paper describes the U.S. financial system?s response to the destruction caused by Hurricane Katrina and examines how financial safety nets helped meet consumers? needs in the aftermath of the storm. Overall, we find that consumers who hold deposit accounts at financial institutions are less vulnerable to financial disruptions than individuals who do not have either a checking or a savings account (the unbanked). The federal banking regulators? and financial institutions? responses to Hurricane Katrina, the financial vulnerability of unbanked families to this unexpected catastrophic ...
Working Paper
The importance of check-cashing businesses to the unbanked: racial/ethnic differences
The roughly 9.5 percent of all U.S. families that are without some type of transaction account (unbanked) are disproportionately represented by minorities. The unbanked often must rely on alternative ways to carry out basic financial transactions such as cashing payroll checks and paying bills. This study analyzes unique survey data and finds that a consumer's decision to patronize check-cashing businesses is jointly made with the decision to be unbanked. For the unbanked, these businesses are an important source for financial services. Attributes that contribute to these decisions, however, ...
Conference Paper
Stored-value cards: challenges and opportunities for reaching emerging markets
In recent years, the financial services industry has become very inventive around new uses of technology to improve the structure and delivery of retail products. One relatively new type of payment product, stored value cards (SVCs), serves as a cash or check alternative. At this point in the industry's development, many of these cards do not provide a platform for saving, saving, building assets, or establishing (or repairing) credit. However, SVCs could pave the way for individuals to have both transactional services and links to broader financial opportunities. This paper discusses the ...
Discussion Paper
Delivery of financial literacy programs
A critical challenge faced by educators, community leaders and policy makers is to bring financial literacy and consumer education effectively to their constituencies. Based on the qualitative evidence gleaned from focus groups, we take a pragmatic approach in proposing ways to deliver financial literacy programs to adults. This article makes several suggestions for implementing financial literacy programs, from outlining important financial literacy and consumer education topics to discussing the logistics of using various method of outreach activities.
Conference Paper
Householder response to the earned income tax credit: path of sustenance or road to asset building
This study seeks to gain a more complete picture about how the Earned Income Tax Credit program influences consumer expenditure and saving decisions. Based on survey data collected from over 18,000 taxpayers participating at the Volunteer Income Tax Assistance sites administered by the Community Food Resource Center, a nonprofit organization in New York City, we find that a fairly large proportion of lower-income taxpayers expect to use the majority of their refund for the purpose of paying debt and other more immediate expenses. Even so, almost 11 percent of these taxpayers reported that ...
Discussion Paper
Prepaid cards: an important innovation in financial services
This paper describes the characteristics of closed-system and open-system prepaid cards. Of particular interest is a class of open-system programs that offer a set of features similar to conventional deposit accounts using card-based payment applications. The benefits that open-system prepaid cards offer for consumers, providers, and issuing banks contribute to the increased adoption of these payment applications. Using these cards, consumers can pay bills, make purchases, and get cash from ATM networks. At the same time, consumers who hold prepaid cards need not secure a traditional banking ...
Journal Article
Small business finance in two Chicago minority neighborhoods
The authors use survey data to measure the use of formal and informal sources of financing by owners of small businesses in two ethnic neighborhoods. The authors find substantial differences across ethnic groups in the amount of start-up funding obtained and in the use of trade credit.