Aiming to increase economic development in disadvantaged communities of color, two University of Wisconsin-Whitewater faculty members just received a substantial financial endorsement for their work.
W.K. Kellogg Foundation awarded Russ Kashian and Richard McGregory a two-year, $400,000 grant. Kashian, a professor of economics, and McGregory, assistant vice chancellor for multicultural affairs and student success, call their project “Building Communities of Color With Minority-Owned Banks: A Racial Equity Proposal.”
In 2013, Kashian and McGregory received national attention for illustrating the important role minority banks play in neighborhoods. Their latest research effort will focus on determining best practices for banks to serve disadvantaged minority communities.
“While some neighborhoods lack access to banks, in others there is a gap in participation,” Kashian said. “Our objective is to determine mechanisms that encourage the use of banks where a bank and an alternative, such as a payday lender, are both available”.
The UW-Whitewater team – which will include student researchers – will review best practices of efficient, socially responsive minority-owned banks across the United States.
The team will investigate the methods minority-owned banks use to stabilize communities by preventing home mortgage foreclosures and look at fiscal education programs meeting the needs of low-income families. Bank policies, fees, community leadership and advertising strategies to attract and retain low-income customers will be also be analyzed.
Another goal of the project is to identify bank deserts – places ripe for minority-owned bank expansion.
“Many communities are not just under-banked, they are un-banked,” said McGregory. “There’s a whole segment of the population locked out of this financial sector, and they end up paying more for services.”
Kashian and McGregory are partnering with the National Bankers Association, a Washington, D.C.-based trade group.
“The National Bankers Association is most appreciative for the grant from the W.K. Kellogg Foundation that is allowing University of Wisconsin-Whitewater economists to advance the idea that amplifying the work of minority banks in the most distressed communities of our country is a great example of the power of public-private partnerships at work,” said Michael A. Grant, president of the National Bankers Association.
Kashian said he hopes this research will lead to reductions in child poverty and youth unemployment in economically disadvantaged communities of color.