한국지역지리학회지 제12 권 제 1 호 (2006) 154-171 The Financial Development of Korean Americans: A Comparison of Korean and Chinese American Banks in California* Hyeon-Hyo Ahn**, Yun-Sun Chung*** 미국에서의 한인 금융: 캘리포니아에서 한국계와 중국계 은행의 비교* 안현효**․ 정연선 *** 요약：본 논문은 캘리포니아의 중국계와 한국계의 양 소수민족은행을 비교하여 한국계 민족은행과 한국계 이민사회의 경제적 관계를 해명하고자 한다. 통상 미국 내 소수민족경제권의 경제적 성과 차이는 문화적 차이 또는 비공식금융의 기여로 설명되는 경우가 많으나 우리는 공식금융제도의 적극적 역할에 주목하여 금융제도와 소수민족경제의 관련성을 강조한다.,, 동시에 한국계 미국은행은 성장 수익성 은행전략 면에서 중국계 소수민족은행과 구분된다는 점을 중시하여, 은행전략 측면에서, 중국계와 한국계가 고객과의 장기적 거래를 중시하는 유사한 관계은행전략을 구사하지만, 은행의 대출분포와 예금분포는 서로 다르다는 점을 지적하였다. 이는 각 소수민족은행이 다른 경영성과를 낳는 이유가 된다. 한국계은행의 경우 대출구조가 사업대출 중심이며, 이자 낳지 않는 예금의 비중이 중국계 민족은행보다 상대적으로 높 은 사실이 한국계 소수민족은행이 높은 성장을 하게 된 배경이다. 따라서 관계은행전략이라는 개념만으로는 다수의 소 수민족은행의 차이를 설명할 수 없으므로, 본 연구는 한국계와 중국계의 이민사회 그 자체의 특수성에 주목하였다. 중 국계 미국인의 경우 인구구성의 이질성과 해외자본의 영향이, 한국계 미국인의 경우 동질적 인구 및 사업구성과 착 한 국계 미국인 금융기관의 경쟁력이 특징적이다. 주요어：소수민족은행, 한국계 미국은행 , 중국계 미국은행 , 관계은행 Abstract ：By comparing to Chinese American banks, this research shows the uniqueness of Korean American banks. This article argues that instead of the cultural attributes and/or informal financial institutions, formal financial institutions, such as the ethnic banks studied here, are responsible for the business success of Asians abroad. However, ethnic banks have different development trajectories depending on their respective ethnic communities. Korean American banks are notably different from Chinese American banks in terms of growth, profitability, and banking strategies. Although both ethnic banks exercise relationship banking strategies in their loan portfolios, their deposit compositions are very different and cause significant differences in financial performance. The focus on business loans and high rates of non-interest deposits allow for higher growth rates in Korean American banks. Therefore, relationship banking does not adequately explain the differences of ethnic banks. This research attempts to understand the underlying factors in choosing banking strategies by mainly focusing on the unique examples found in Korean and Chinese immigrant societies. For Chinese Americans, the heterogeneity of their population composition and foreign influence dominate their bank structures. On the other hand, Korean American homogeneity and business orientation are distinctly different. The influence of Korean capital is not significant when compared to overseas Chinese capital. Key Words： Ethnic banking, Korean Americans, Chinese Americans, Relationship banking 1. Introduction Korean Americans have demonstrated significant 1) economic accomplishments despite their relatively 1) Research Backgrounds and Purpose short immigration history. The Average Family Income (AFI) of Korean Americans in 1990 is The economic performance of Korean immigrants estimated to be $33,919, which is 91.3% of the in the U.S. has been very impressive (Yoon, 1996). $37,152 earned by Caucasians in the U.S. This * This article is the result of a collaborative study conducted by the Korean Ethnic Bank Research Project Team, which was funded by Korea Research Foundation (KRF-2003-072-BS204) ** Daegu University, Economics([email protected]) *** Korea Military Academy, American Studies - 154 - 한국지역지리학회지 제12 권 제 1 호 (2006) value far exceeds the AFIs achieved by Hispanic previous efforts to uncover the relations between and African-Americans, which are 68% and 60% ethnic economies and their financial institutions, of the earnings of Caucasians, respectively. mainly by the comparison of Korean American Asian-American owned businesses have also banks and Chinese American banks. experienced significant growth. As of 1997, Asian Business success of Asians abroad is often and Pacific Islander (API) owned businesses explained by certain cultural attributes and/or numbered 912,960 nationwide (4.4% of all informal lending circles (such as Hui in Chinese businesses in U.S.). Among minority-owned and Kye in Korean) that have traditionally been businesses, APIs are behind Hispanics (almost prevalent within Asian American communities 1.2 million), but ahead of African Americans (Geertz, 1956; Light, 1972; Light and Bonacich, (823,499) and Native Americans (197,300), despite 1988; Light and Gold, 2000). However, such the fact that the API population is less than preconceived notions belie today's reality of one-third of African Americans and Hispanics. Chinese and Korean American ethnic banks. Among APIs, Korean owned businesses have Recently, research was collected showing the higher average sales and receipts ($339,000) development of Latino, African American, and when compared to all three minority groups Asian ethnic banks (Li and Dymski, 2002; Li, (Native Americans - $174,000, Hispanics - $ Yu, Dymski and Chee, 2001). These reports 155,000, and African Americans - $86,000). indicated that each ethno-banking sector is Moreover, Asian-Americans also have higher indeed unique; i.e. their development trajectories rates of entrepreneurship: 105.6 Asian owned are time-dependent and path-specific. These companies for every 1,000 Asian adults, nearly researchers also indicate that Chinese banks are twice the rate of Hispanics and more than three primary conduits for savings. This allows for times the rate of African Americans (1997 credit flows that provide Chinese ethnic banks Economic Census http://www.census.gov/epcd/mwb97/ an opportunity to play an entrepreneurial role. us/us.html). However Li, Yu, Dymski and Chee (2001) and While there has been much research on Ahn (2003) were able to explain neither the Korean immigrants in the US in the fields of uniqueness of Korean American banks, nor the history, sociology, and anthropology, a notable cause of the differences between Korean and absence is found in the field of economics. Even Chinese banks in California. This research the existing studies on economic performance attempts to clear up the cause of the differences have focused mainly on case studies confined to between Korean and Chinese banks. The one or two areas. A handful of research on purpose of this article is to understand the economic performance, mostly done since the uniqueness of Korean and Chinese ethnic 1992 Los Angeles riots (Abelmann and Lie, 1995; banking strategies by diving deeper into more Chang, 1990), have focused on small businesses detail in the differences between Korean and owned by Korean Americans (Park, 1997; Light Chinese American societies. This also can clarify and Bonacich, 1998; Min, 1995, 1996). These the close relation of formal financial institutions studies have not paid significant attention to the (Korean American banks) and Korean American relations between the Korean American economy businesses. and their financial institutions. We have done Section 2 shows the differences between some research to fill this gap (Ahn and Hong, Korean and Chinese American banks using 2001; Ahn, 2003). This research continues our statistical index. Section 3 analyses the different - 155 - The Financial Development of Korean Americans: A Comparison of Korean and Chinese American Banks in California strategies of these two groups and the causes of too. their differences. Section 4 summarizes the In this research we use two kinds of data. implications of our research in understanding the The first one is formal reports, called “Call relations between financial institutions and the Report” which is supposed to be submitted to economic performance of the same ethnic groups. FDIC (Federal Deposit Insurance Corporation) every quarter. These reports have the information 2) Research Area and Data such as establishment date, number of branches, number of employees, the location of headquarter To understand the uniqueness of ethnic banks and types of business. They also show the of two ethnic groups in California, this research assets size, loan and deposit portfolio. Using this adopts the area of L. A. County which can data, we can get the trends of these ethnic represent the situation of California. Figure 1 banks because this information has been accumulated shows the geographical distribution of those since the establishment dates of these banks. ethnic banks in L.A. county area. Theses maps The information, however, does not define the indicate that Korean American banks are mainly ethnicity of those banks. Therefore we needed to concentrated in Korea Town in L.A. while identify the ethnicity of those banks with the Chinese American banks are scattered around help of Korean and Chinese bankers. The L.A County focusing on San Gabriel Valley definition can be obtained by the two criteria of region, east of L. A. This reflects the population ownership and client base. For this research we movement of Korean and Chinese immigrants interviewed 10 Korean bankers in the U.S from Figure 1. The Geographical Distribution of 8 Korean American Banks and 22 Chinese American Banks in L. A. County in 1999 (headquarters and bank branches) - 156 - 한국지역지리학회지 제12 권 제 1 호 (2006) July 17th, 2004 to August 13th, 2004. The According to our field research, California has interview provided the useful qualitative 11 (of which 8 are active as of 2004) of the information to understand the dynamics of total of 19 Korean American banks (of which 15 Korean and Chinese ethnic banks. For the are active as of 2004) in the US. The total Chinese banks, Dr. Wei Li, our partner of ethnic number of branches in the US is 119, of which banking research team, helped us get the list of 80 branches are concentrated in California. On Chinese banks using her interview. the other hand, the estimated number of Chinese banks in California is 31 (of which 22 are active 2. The Development of Korean as of 2004). American Banks The concentration rate of Korean ethnic bank A Comparison with Chinese American Banks branches in California (67% as of 1997, Economic Census Data) is much higher than that of the Korean banks, like Chinese banks, can be Korean population in California (32.1% as of categorized as ethnic community banks.