It's not that they are “underserved” by lenders. It's that a lot of the prospective loans are "undeserved" due to credit history and past performance.
They are credit deserts for exactly the same reason they are food deserts. Big volume grocers like Kroger, Sav-a-Lot, Aldi's and Wal-Mart won't put up stores in these neighborhoods because the loss from stealing is just too high to make even a modest profit. Likewise, bigger banks won't put up branches for the same reason.
These leaves any service they get at all to smaller, higher margin grocers or payday lender type places which can survive in such a dangerous environment. It is NOT rocket science.
It’s not good to lend money to people who have know visible means of paying it back. Not good for the lenders; not good for the borrowers.
“underserved” by lenders
It’s not that they are “underserved” by lenders. It’s that a lot of the prospective loans are “undeserved” due to credit history and past performance.
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Banks are not stupid. And they are not run by the stereotypically racist type of southerner that inhabited the old south. Modern banks are well aware that they would be shafting themselves by favoring whites with higher credit risk than blacks.