Study shows racial makeup influences bank placement in Detroit area

A new study from the University of Michigan reveals that the placement of banks and financial services in the Detroit area is heavily influenced by the racial makeup of neighborhoods. This trend persists even when considering income and poverty levels. The research, covering 2000 to 2016, shows that as Black populations increase, traditional banks often withdraw, while alternative financial services, like payday lenders, move in. This shift can lead to higher financial management costs for these communities. The study indicates that changes in racial demographics often precede the opening of alternative financial services, suggesting that financial institutions actively shape market dynamics based on race.