Using Geographic Information Systems to Identify Credit Union Placement in African-American Communities

Abstract

According to a recent 2015 FDIC report, as much as 30% of the populations of the states of Virginia and NC are under- or un-banked. Unbanked individuals are more likely to utilize high fees and high-interest charging financial services such as payday loans, check cashing services, and money orders to conduct business transactions. These higher fees limit the resources these individuals and the communities have to build wealth; thereby, further contributing to the ever-widening wealth gaps. Several reports have chronicled the phenomenon of unbanked communities and many suggest that trust or lack thereof as well as the absence of financial institutions in certain communities may play a critical role in individuals remaining unbanked or underbanked. Indeed, using Geographic Information Systems (GIS), we demonstrated that credit unions tend to be absent in poorer neighbors and in higher income areas that have larger density of African-Americans. Given that, there are federal economic development programs to assist financial institutions that serve underserved areas, we propose to use GIS data to pinpoint those underserved areas with stable income which could benefit from the expansion of Credit Unions in those communities.

Keywords: Geographic Information Systems; GIS; Credit Unions; Rural; Alternative Financial Services; African-Americans; Minorities

Australian Academy of Accounting and Finance Review, vol 4, issue 2, April 2018, pp 59-65