UNDERGROUND BANKS: THE PERSPECTIVES OF CHINESE ILLEGAL IMMIGRANTS IN UNDERSTANDING THE ROLE OF INFORMAL FUND TRANSFER SYSTEMS IN THE UNITED STATES A Dissertation Submitted to the Temple University Graduate Board In Partial Fulfillment of the Requirements for the Degree of Doctor of Philosophy By Linda Shuo Zhao August 2009 © Copyright by Shuo Zhao 2009 All Rights Reserved ii ABSTRACT Title: Underground Banks: The Perspectives of Chinese Illegal Immigrants in Understanding the Role of Informal Fund Transfer System in the United States Candidate: Linda Shuo Zhao Degree: Doctor of Philosophy Temple University, 2009 Doctoral Advisory Committee Chair: Dr. John Goldkamp Committee Members: Dr. Mark Haller, Dr. Kate Auerhahn The financial link in the process of illegal immigration is a little researched domain in the literature. This research is the first exploratory study to examine the role of Chinese-operated informal fund transfer systems in the U.S. in the lives of Chinese illegal migrant workers and their families who remained in China. The primary source of data was in-depth interviews with thirty illegal immigrants in New York City and Philadelphia. The findings show that the emergence of underground banks in the U.S. coincided with the largest waves of Chinese illegal immigrants smuggled into the U.S. since the later 1980s. They served as a preferred means of fund transfer among Chinese illegals due to their unique service, not necessarily because of the clients’ illegal status, or any coercive actions by human smuggling groups. Through inductive analysis based on the narrative data, this research is able to trace the trajectory of the evolution of Chinese underground banks over the past decades. The evidence seems to suggest an indirect role played by these illegal fund transfer systems in sustaining transnational illegal labor migration achieved through human smuggling. iii The research also suggests a declining importance of underground banks and a shift away from their use toward legitimate fund transfer channels among Chinese illegal immigrants since the mid-1990s and a seemingly new role of formal institutions in filling in the vacancy left by underground banks. Finally, the findings suggest that underground banks may have been forced to and have adapted to a narrower and more illicit use. iv ACKNOWLEDGMENTS This research project would have been impossible were it not for generous help from many people and institutions. First of all, I would like to thank these immigrant respondents whom I solicited to engage in interviews for their courage and trust. Their personal experiences offered invaluable material for this first study on underground banks serving the immigrant Chinese community in the United States. Genuine thanks also go to five immigrants, (three) Mr. Chen, Mr. Zheng, and Ms. Chen, who helped locate the research participants. The following Chinese churches, the Minen Church (New York City), the Minen-Philadelphia Church, the Chinese Christian Church, and China Gospel Church (Philadelphia), kindly allowed me to join them for the research purposes in varied activities they hosted, and agreed to let me use their premises for conducting surveys and interviews. I am deeply indebted to Dr. John S. Goldkamp. I’m fortunate to have had him serve as my advisor to see me through my Ph.D. study. He has left an indelible mark throughout the whole process of this dissertation research, ranging from major concerns like designing the research, shaping the analytic framework, and structuring the arguments, to minor details like grammar errors. His constructive critique and astute comments helped produce a solid dissertation. I would also like to express my gratitude to Dr. Mark Haller who offered guidance and timely advice while I was wrestling with the thorny theory issue; to Dr. Kate Auerhahn for her reading the final draft with great care and posing many challenging questions in helping sharpen the focus of my analysis. My special thanks go to Professors Phil Harris, Kay Harris, Matt Hiller, and other faculty members and staff for the help and encouragement I have received in the past years. Warm thanks go to Travis Taniguchi, Chris Salvatore, Kim Houser, Justin Medina, and v many other fellow graduate students who provided a collegial environment in which to learn and grow and much needed assistance to a person with severe hearing loss. I wish to acknowledge the funds provided by Dr. Goldkamp, the Graduate School, the College of Liberal Arts, and the Center for Humanities, Temple University, which enabled me to conduct the preliminary research in mainland China, and complete the interviews both in New York City and Philadelphia. I also would like to take this opportunity to thank the department of Criminal Justice for generously supporting me through lengthy years of my doctorate study. It is with profound gratitude that I want to recognize the prayer support offered for this research and for me by fellow Christians from three Chinese churches over the years, which has sustained me throughout those difficult days of my life. In particular, Dr. Weihua Niu, Pai and Kim Chung, demonstrated a loving kindness which never failed to refresh and comfort me. My debt is also great to my parents living a Pacific Ocean away, who never complained about the inconvenience caused by my lengthy academic pursuit in the United States, nor gave up hope in me. Finally, I owe my immeasurable thanks to J. C., who has been the source of my strength and help, lifted me out of distress and despair in those trying times, and graciously taught me a lesson of perseverance while faithfully accompanying me on this long, hard journey. vi TABLE OF CONTENTS Page ABSTRACT ........................................................................................................................ ii ACKNOWLEDGMENTS ...................................................................................................v LIST OF TABLES ...............................................................................................................x LIST OF FIGURES ........................................................................................................... xi LIST OF CHARTS ........................................................................................................... xii CHAPTER 1. INTRODUCTION ...................................................................................................1 2. THE ROLE OF UNDERGROUND BANKS: THEORETICAL PERSPECTIVES AND PRIOR RESEARCH .........................................................7 Theoretical Perspectives on Illegal Enterprise................................................9 Theoretical Perspectives on Ethnic Enterprise .............................................16 Research on Chinese Underground Banks....................................................21 3. CHINESE UNDERGROUND BANKS IN CHINA AND IN THE UNITED STATES .................................................................................................27 Underground Banks in Mainland China .......................................................28 Underground Banks in the United States ......................................................44 vii 4. RESEARCH METHODOLOGY ...........................................................................56 Research Questions .......................................................................................56 Methodology: Recruitment and Interview of Illegal Chinese Immigrants in the United States ....................................................................63 Validity Issues: Bias and Reactivity .............................................................79 Confidentiality and Anonymity ....................................................................81 Data Analysis ................................................................................................82 5. THE MAIN CLIENTELE AND OPERATORS OF UNDERGROUND BANKS: ANALYSIS AND FINDINGS ...............................................................87 The Main Clientele of Underground Banks ..................................................89 Individuals Operating Underground Banks and Operating Style ...............103 Summary .....................................................................................................118 6. THE MECHANISMS, PURPOSES FOR USE, AND THE ROLE OF UNDERGROUND BANKS IN SMUGGLING OF CHINESE ..........................121 The Central Role of Dialect-based Networks .............................................122 Illegal Immigrants’ Use of Underground Banks .........................................137 The Shift Away From the Use of Underground banks in Remittance Flows ...........................................................................................................150 The Role of Underground Banks in Illegal Migration Aided Through Human Smuggling ......................................................................................154 Summary .....................................................................................................163 7. THE FACILITATING ROLE OF UNDERGROUND BANKS: IMPLICATIONS OF RESEARCH .....................................................................167 Key Findings ...............................................................................................167 Theoretical And Practical Implications ......................................................171 Policy Implications .....................................................................................178