Financial Integration or Financial Mismatch: Latino Economic Elites and Ethnoracial Financial Activism

• In Event: 1122 - Section on Inequality, Poverty, and Mobility Refereed Roundtable Session
  In Refereed Roundtable 60min: Table 05. Knowledge, Market and Economy

Abstract

Scholars question whether Latino communities contain the social, financial, and ethnic resources that contribute to mobility and integration. This research examines the relationship between Latino ethnobanks in Los Angeles chartered by Latino elites, the Latino entrepreneurs that they target, and the broader financial structure in which Latino financial institutions and entrepreneurs are embedded. We find that Latino elites charter ethnobanks to make a profit, but they engage in a pattern of ethnoracial financial activism and operate Latino banks within a banktivist model. The Latino elite view ethnobanks as community capital institutions that have the potential to grow the Latino middle class via individual-level financial literacy programs, low-cost financial services, and access to capital for Latino entrepreneurs. However, a history of financial marginalization combines with historically contingent market conditions to create structural barriers to accessing credit, leading to a financial mismatch where bonds of ethnic solidarity between Latino entrepreneurs and banks dissolve. These findings underscore how federal regulation aimed at reigning in large multinational banks’ pre-recession misdeeds, and changes in the banking system that privileges standardized financial modeling, can have profound effects on individuals and institutions in communities of color by reinforcing, rather than dismantling, economic inequalities.

Authors

• Jody Agius Vallejo, University of Southern California

• Stephanie L. Canizales, University of Southern California