Report: Low-income AAPIs financially vulnerable, lack access to financial mainstream

A NEW report released by the National Coalition for Asian Pacific American Community Development (National CAPCD) indicates a growing financial vulnerability among Asian Americans and Pacific Islanders (AAPI), despite being a well-banked community.

“Asian Americans and Pacific Islanders constitute a diverse community comprised of ethnic subgroups that have some of the highest levels of poverty and the lowest per capita income compared to other populations,” Rep. Judy Chu (D-Calif.), chair of the Congressional Asian Pacific American Caucus, said in a statement. “This is due in large part to cultural and linguistic hurdles that prevent many AAPIs from accessing financial information, services, and capital.”

In the report, titled “Scrimping + Saving,” 89 percent of 2,013 respondents overall possess a checking account, savings account or both. However, 56 percent either did not know where to turn to for financial advice or resorted to potentially unreliable sources;23 percent did not know where or how to obtain emergency funds if necessary or doubted they could raise them at all, leaving them vulnerable to predatory financial services such as payday lenders. New immigrants particularly have lower rates of bank account ownership, rely more heavily on cash for daily transactions and are unable to conduct financial transactions in English.

At a news conference held Wednesday, April 1, at the offices of the Thai Community Development Center in Los Angeles, one man with limited English speaking abilities shared he has no bank account and has paid fees of more than $100 to cash checks he has received as payment.

Another finding in “Scrimping + Saving” was that the majority of AAPIs, particularly those with lower English proficiency, turn to friends and family for financial advice rather than financial institutions or advisors. Additionally, 61 and 69 percent of AAPI male and female respondents, respectively, said they are unaware of their credit score.

To address this vulnerability among AAPIs, the report offered nine solutions to improve access to financial knowledge, access to and usage of asset-building products, and influence on consumer behavior. Specific recommendations include focusing on credit awareness and protection from predatory lending in financial education, and hiring multi-cultural staff at financial institutions to enhance language and cultural accessibility.

“It is imperative that we invest in solutions that build our community’s financial capability,” said Jane Duong, director of programs and advocacy at National CAPACD, an organization committed to increasing financial capability within the AAPI community. “Without them, our community members will turn to predatory products and services that strip away their wealth and assets.”

The majority of respondents in the study reported annual household incomes of $50,000 or less; nearly one-third said they earn less than $20,000 per year.

Rep. Maxine Waters (D-Calif.), a ranking member of the House Committee on Financial Services and representative of a district where AAPIs make up a significant percentage of the population, said in a statement that the rapidly growing group is faced with “significant cultural and systemic barriers to achieving the American dream.”

“We must ensure that Washington is focused on the specific needs of all communities facing poverty, through policies that promote safe, affordable services and products for low-income individuals,” Waters said.

The new report has received praise from leaders involved in AAPI community matters, including Bob Annibale, global director of Citi Community Development.

“Scrimping and Saving is a critical piece of research that disaggregates data to better understand the diverse needs and challenges in the AAPI community, so that appropriate information, coaching, financial products and services can be designed to expand financial access and capability, supporting individuals and families to achieve their goals,” Annibale said in a statement.

Duong also said the report helps in better informing solutions adopted by local community based organizations. However, she also acknowledged limitations in the findings and said there is room for follow-up studies.

Ethnic groups identified in the study were Chinese, Bangladeshi, Korean, Nepalese, Thai, Taiwanese and Pacific Islander. Due to the limited number of respondents in the survey sample, Filipinos, Asian Indians and Japanese were not specifically listed, although they were categorized under Other Asian or PI. Similarly, respondents who reported their heritage as Chamorro, Native Hawaiian, Samoan and Tongan were grouped into the Native Hawaiian and Other Pacific Islander category.

Respondents in the report came from Los Angeles, Oakland, Houston, Chicago and Jackson Heights, Ny. It did not include individuals from Hawaii, where more than 35 percent of the population is Asian, according to the 2010 US Census.

Faith Bautista, president and CEO of the National Asian American Coalition (NAAC), wondered why Filipinos were not identified as a separate group in the report, given that they are the largest Asian ethnic group in California at 1.5 million. However, she said the study accurately reflects the financial vulnerability Filipinos face. Bautista commended the National CAPACD for releasing the report, which debunks the myth that Asians are financially knowledgeable.

“We [Filipinos] are still not financially educated. There’s still a lot of education that needs to be done, especially among low- and moderate-income [earners],” she said.

Bautista also agreed with the recommendations included in the report and said the NAAC is also making efforts to improve financial literacy among Filipinos through workshops. It is also conducting studies at supermarkets frequented by the community to find out how to help them.

The National CAPACD partnered with member organizations across the United States to conduct the study in seven different languages and with 14 different ethnic groups, making it the first study conducted of this scope and size to analyze in-depth the financial health of AAPIs.

Organizations that participated in the study include the Chinese American Service League in Chicago, Chinese Community Center in Houston, Empowering Pacific Islander Communities in Long Beach, Korean Resource Center in Los Angeles, Thai Community Development Center in Los Angeles, Chhaya Community Development Corporation in Jackson Heights, and East Bay Asian Local Development Corporation in Oakland.