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Examining the Relocation of Minority Businesses and Its Relationship with Gentrification and the Banking Industry

Received: 28 October 2023     Accepted: 13 November 2023     Published: 21 November 2023
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Abstract

Gentrification involves the introduction of innovative business prospects. Bringing new and diverse residents to a community necessitates the emergence of novel businesses and the revitalization of existing ones, thereby fostering opportunities. To accomplish this, businesses old and new often need financial services from banking institutes. Banks provide small businesses with business-specific financial services that support small business owners in managing their money. Studies add that banks also provide business owners with checking account services, business credit, debit cards, merchant services, lines of credit, and business loans. When the right relationship exists, a business owner’s bank does more than hold their money. It serves as a vehicle to address immediate business needs and plan for the future. Banks are vital to the life and growth of small businesses. While banks have provided these services for new white-owned businesses entering gentrified communities, research has demonstrated that these offerings are altered when minority small businesses are engaged. The research has found that minority businesses experience various issues when seeking financial services from banking institutes. These issues include a higher percentage of loan denials as compared to their white counterparts and higher interest rates, to name a few. The research sought to gather data on these disparities, utilizing various studies from cities and states experiencing gentrification, linking this information with past and presenting banking practices towards minorities and their businesses. The research also sought to demonstrate the importance of minority businesses to their communities and the results when those minority businesses are denied financial services from banking institutes. Finally, the research demonstrates the tools and resources accessible to aid minority businesses in redeveloping and thriving as their communities undergo transformation during gentrification and in the subsequent phases.

Published in Science Journal of Business and Management (Volume 11, Issue 4)
DOI 10.11648/j.sjbm.20231104.13
Page(s) 157-163
Creative Commons

This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.

Copyright

Copyright © The Author(s), 2023. Published by Science Publishing Group

Keywords

Banking, Gentrification, Inequities, Minority Business, Lending Practices

References
[1] Sutton, S. (2020). Gentrification and the Increasing Significance of Racial Transition in New York City 1970–2010. Urban Affairs Review, 56 (1), 65–95. https://doi.org/10.1177/1078087418771224
[2] Leppert, R. (2023). A look at Black-owned businesses in the US.
[3] Schwartz, D. B. (2019, September 24). How America's Ugly History of Segregation Changed the Meaning of the Word 'Ghetto'. Retrieved from https://time.com/5684505/ghetto-word-history/.
[4] Parshina-Kottas, Y., Singhvi, A., Burch, A. D. S., Griggs, T., Gröndahl, M., Huang, L., Wallace, T., White, J., and Williams., J. (2021, May 24). WHAT THE TULSA RACE MASSACRE DESTROYED. Retrieved from https://www.nytimes.com/interactive/2021/05/24/us/tulsa-race-massacre.html
[5] Weitz, J. (2018, January 22). Why Minorities Have So Much Trouble Accessing Small Business Loans. Forbes. Retrieved from https://www.forbes.com/sites/forbesfinancecouncil/2018/01/22/why-minorities-have-so-much-trouble-accessing-small-business-loans/?sh=52932e8f55c4
[6] Bryson, J. (2013). The nature of gentrification. Geography Compass, 7 (8), 578-587.
[7] Faraldo, D. (2017, July 7). 5 REASONS YOU MAY WANT TO RENOVATE YOUR STORE. Retrieved from https://cdnpos.com/5-reasons-you-may-want-to-renovate-your-store/
[8] U. S. Department of Commerce, Minority Business Development Agency, The State of Minority Business Enterprises, An Overview of the 2002 Survey of Business Owners, Number of Firms, Gross Receipts, and Paid Employees (2006).
[9] Robb, A. and Morelix, A. (2016, October). Startup Financing Trends by Race: How Access to Capital Impacts Profitability. Retrieved from https://www.kauffman.org/wp-content/uploads/2019/12/ase_brief_startup_financing_by_race.pdf
[10] Costa, C. (2020, August 25). Minority entrepreneurs at a tipping point as Black-owned banks dwindle in the U. S. CNBC. Retrieved from https://www.cnbc.com/2020/08/25/minority-entrepreneurs-at-tipping-point-as-black-owned-banks-dwindle.html
[11] Barr, M. S. (2015, March). Minority and Women Entrepreneurs:
[12] Building Capital, Networks, and Skills. Retrieved from https://www.brookings.edu/wp-content/uploads/2016/07/minority_women_entrepreneurs_building_skills_barr.pdf
[13] Wuetcher, S. (1996, March 4). Store Appearance Affects Consumers’ Ratings of Store Brands. Retrieved from http://www.buffalo.edu/news/releases/1996/03/3119.html
[14] Fairlie, R. W. and Robb, A. M. (2010, January). Disparities in Capital Access between Minority and Non-Minority-Owned Businesses: The Troubling Reality of Capital Limitations Faced by MBEs. Retrieved from https://www.mbda.gov/sites/default/files/migrated/files-attachments/DisparitiesinCapitalAccessReport.pdf
[15] Masunaga, S. and Avery, T. (2020, June 20). Black-owned businesses face a system set up against them. COVID-19 makes it worse. Retrieved from https://www.latimes.com/business/story/2020-06-20/black-owned-business-loans-banks
[16] Marks, G. (2020, January 16). Black-owned firms are twice as likely to be rejected for loans. Is this discrimination? The Guardian. Retrieved from https://www.theguardian.com/business/2020/jan/16/black-owned-firms-are-twice-as-likely-to-be-rejected-for-loans-is-this-discrimination
[17] Arora, R. (2020, November 24). Why Black-Owned Businesses Struggle To Get Small Business Loans. Forbes. Retrieved from https://www.forbes.com/sites/rohitarora/2020/11/24/why-black-owned-businesses-struggle-to-get-small-business-loans/?sh=48883b7c2303.
[18] Consumer Financial Protection Bureau (2022). What protections do I have against credit discrimination? Retrieved from https://www.consumerfinance.gov/fair-lending/.
[19] Board of Governors of the Federal Reserve System (2020, September 28). Community Reinvestment Act (CRA). Retrieved from https://www.federalreserve.gov/consumerscommunities/cra_about.htm#:~:text=The%20Community%20Reinvestment%20Act%20(CRA)%2C%20enacted%20in%201977%2C,%2Dincome%20(LMI)%20neighborhoods
[20] Office of the Comptroller of the Currency (2014, March). Community Reinvestment Act. Retrieved from https://www.occ.gov/publications-and-resources/publications/community-affairs/community-developments-fact-sheets/pub-fact-sheet-cra-reinvestment-act-mar-2014.pdf
[21] Frandsen, Sanne. (2017). Organizational Image. 10.1002/9781118955567.wbieoc103.
[22] Federal Trade Commission (2015, February). Mortgage Discrimination. Retrieved from https://www.consumer.ftc.gov/articles/0188-mortgage-discrimination
Cite This Article
  • APA Style

    King, R. (2023). Examining the Relocation of Minority Businesses and Its Relationship with Gentrification and the Banking Industry. Science Journal of Business and Management, 11(4), 157-163. https://doi.org/10.11648/j.sjbm.20231104.13

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    ACS Style

    King, R. Examining the Relocation of Minority Businesses and Its Relationship with Gentrification and the Banking Industry. Sci. J. Bus. Manag. 2023, 11(4), 157-163. doi: 10.11648/j.sjbm.20231104.13

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    AMA Style

    King R. Examining the Relocation of Minority Businesses and Its Relationship with Gentrification and the Banking Industry. Sci J Bus Manag. 2023;11(4):157-163. doi: 10.11648/j.sjbm.20231104.13

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  • @article{10.11648/j.sjbm.20231104.13,
      author = {Reginald King},
      title = {Examining the Relocation of Minority Businesses and Its Relationship with Gentrification and the Banking Industry},
      journal = {Science Journal of Business and Management},
      volume = {11},
      number = {4},
      pages = {157-163},
      doi = {10.11648/j.sjbm.20231104.13},
      url = {https://doi.org/10.11648/j.sjbm.20231104.13},
      eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.sjbm.20231104.13},
      abstract = {Gentrification involves the introduction of innovative business prospects. Bringing new and diverse residents to a community necessitates the emergence of novel businesses and the revitalization of existing ones, thereby fostering opportunities. To accomplish this, businesses old and new often need financial services from banking institutes. Banks provide small businesses with business-specific financial services that support small business owners in managing their money. Studies add that banks also provide business owners with checking account services, business credit, debit cards, merchant services, lines of credit, and business loans. When the right relationship exists, a business owner’s bank does more than hold their money. It serves as a vehicle to address immediate business needs and plan for the future. Banks are vital to the life and growth of small businesses. While banks have provided these services for new white-owned businesses entering gentrified communities, research has demonstrated that these offerings are altered when minority small businesses are engaged. The research has found that minority businesses experience various issues when seeking financial services from banking institutes. These issues include a higher percentage of loan denials as compared to their white counterparts and higher interest rates, to name a few. The research sought to gather data on these disparities, utilizing various studies from cities and states experiencing gentrification, linking this information with past and presenting banking practices towards minorities and their businesses. The research also sought to demonstrate the importance of minority businesses to their communities and the results when those minority businesses are denied financial services from banking institutes. Finally, the research demonstrates the tools and resources accessible to aid minority businesses in redeveloping and thriving as their communities undergo transformation during gentrification and in the subsequent phases.
    },
     year = {2023}
    }
    

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    AU  - Reginald King
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Author Information
  • Business and Entrepreneur Department, Prince George’s Community College, Largo, United States

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