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Fringe Banking in Winnipeg’s North End

Report by Jerry Buckland, Thibault Martin

This study, by Buckland and Martin, explores why fringe banks in Winnipeg’s north end are growing, when they charge higher fees for services that do mainstream banks. They focus on why clients use these services, and whether fringe banks earn excessive profits. The authors present contrasting views on the legitimacy of fringe banks and outline results from recent studies on fringe banking in Canada and the US.

Buckland and Martin also define what they mean by fringe banks, or fringe financial institutions: it is an industry that includes pawnshops, cheque-cashing firms, payday loan firms, and rent-to-owns. More broadly, it can also include finance and loan companies. The authors argue that the dependence of low-income people on fringe banks has generated concerns regarding the rise of fringe financial institutions, because these services further impoverish low-income people.

On the other hand, Buckland and Martin identify the positive view of fringe financial institutions; from a market perspective, the rise of fringe banking represents the growth of new, innovative financial services previously unavailable. As a result, these new services and firms can meet the needs of a particular set of consumers in a way that mainstream banks have previously been unable to do. This report concludes with recommendations from Buckland and Martin regarding fringe banking.

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Policy Publication Details

Author(s):	Jerry Buckland; Thibault Martin;
Publisher:	Canadian Centre for Policy Alternatives [ Visit Website ]
Year Published:	2005;	Publisher Type:	Research Institute
Publicly Available:	Yes	Research Focus:	Provincial;
Registration Required:	No	Language:	English
Payment Required:	No	Publication Format:	Adobe PDF

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Subjects / Categories:

Policy Articles / Monetary & Capital Management / Monetary Policy
Policy Articles / Monetary & Capital Management / Bank Mergers
Policy Articles / Monetary & Capital Management / Bank Mergers / 2005
Policy Articles / Monetary & Capital Management / Monetary Policy / 2005
Policy Articles / Monetary & Capital Management

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Keywords / Tags:

fringe banking; fringe financial services; Winnipeg's North end; pawnshops; cheque-cashing; low-income people; innovative financial services;