FRINGE BANKING IN MILWAUKEE - THE RISE OF CHECK-CASHING BUSINESSES AND THE EMERGENCE OF A 2-TIERED BANKING SYSTEM

Check-cashing businesses constitute a growing industry, particularly i n low-income and nonwhite neighborhoods. This case study of Milwaukee, Wisconsin, finds that check-cashing businesses are concentrated in th e central city while conventional banks are concentrated in outlying c ity and suburban communities. These services are growing, despite rela tively high fees, primarily because of their convenient hours and loca tions for central-city residents, exclusionary behavior by conventiona l institutions, and financial problems of area households. More effect ive marketing by conventional banks and more aggressive enforcement of community reinvestment requirements by regulatory agencies would blun t development of two-tiered banking and facilitate revitalization of d istressed communities.