In Stage 3 (ethnic identity clarification) of Banks's Typology of Ethnic Identity, individuals begin to recognize both the positive and negative aspects of their own ethnic groups. This stage is characterized by self-acceptance and an absence of hatred or fear toward other groups.

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Banks's Typology of Ethnic Identity consists of six stages: (1) ethnic psychological captivity, (2) ethnic encapsulation, (3) ethnic identity clarification, (4) bi-ethnicity, (5) multi-ethnicity and reflective nationalism, and (6) globalism and global competency.

Six Stages of Banks's Typology of Ethnic Identity

- Dominant culture internalizes the myth about the inferiority of other group
- Marginalized groups become insular either out of fear or strong ethnic identity 
- The stronger the experiences in stage one, the higher the level of ethnocentrism in the second stage. 

Bank's Model: Stage Two, Ethnic Encapsulation, 

-  Global competency of the fifth
-  People learn increasingly how to balance three identities: ethnic, national, global
- People learn when to use which identity in certain context

Bank's Model: Stage Six, Globalism and Competency

In Stage 5 (multi-ethnicity and reflective nationalism) of Banks's Typology of Ethnic Identity, individuals develop cross-cultural competency. They move beyond superficial aspects of a culture, such as holidays and food, to appreciate its underlying cultural value. At this stage, people switch comfortably between cultures and act as responsible citizens.

Banks's Typology of Ethnic Identity: Stage Five, Multi-Ethnicity and Reflective Nationalism

In Stage 1 (ethnic psychological captivity) of Banks's Typology of Ethnic Identity, individuals internalize negative racial and ethnic stereotypes and beliefs about their own group. Marginalized groups experience this stage strongly due to the socio-historical context of their oppression.

Banks's Typology of Ethnic Identity: Stage One, Ethnic Psychological Captivity

In Stage 4 (bi-ethnicity) of Banks's Typology of Ethnic Identity, individuals possess both the skills and the desire to function in two cultures, typically the dominant culture and their own, depending on their social location. Contact with other ethnic groups is crucial for achieving this stage; consequently, individuals living in highly homogeneous environments may take longer to reach it.

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