1. Mainstream Finance: Why Don't the Poor Participate? Evidence from Bank Branching Deregulation in the United States
- Author
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Adrien Matray, Claire Celerier, Banque de france, Banque de France, Groupement de Recherche et d'Etudes en Gestion à HEC (GREGH), Ecole des Hautes Etudes Commerciales (HEC Paris)-Centre National de la Recherche Scientifique (CNRS), and HEC Paris Research Paper Series
- Subjects
Bank account ,Unbanked ,Monetary economics ,Supply side ,Household Finance ,Imperfect Competition ,JEL: D - Microeconomics/D.D4 - Market Structure, Pricing, and Design/D.D4.D43 - Oligopoly and Other Forms of Market Imperfection ,Competition (economics) ,Deregulation ,JEL: G - Financial Economics/G.G2 - Financial Institutions and Services/G.G2.G21 - Banks • Depository Institutions • Micro Finance Institutions • Mortgages ,Banks ,Discrimination ,Economics ,JEL: D - Microeconomics/D.D1 - Household Behavior and Family Economics/D.D1.D14 - Household Saving ,Personal Finance ,[SHS.GESTION]Humanities and Social Sciences/Business administration ,Racial bias ,JEL: G - Financial Economics/G.G2 - Financial Institutions and Services/G.G2.G28 - Government Policy and Regulation ,JEL: J - Labor and Demographic Economics/J.J1 - Demographic Economics/J.J1.J15 - Economics of Minorities, Races, Indigenous Peoples, and Immigrants • Non-labor Discrimination ,Household finance ,Imperfect competition ,health care economics and organizations ,Regulation - Abstract
This paper studies the impact of financial inclusion on wealth accumulation. Exploiting the US interstate branching deregulation between 1994 and 2005, we find that an exogenous expansion of bank branches increases low-income household financial inclusion. We then show that financial inclusion fosters household wealth accumulation. Relative to their unbanked counterparts, banked households accumulate assets in interest bearing accounts, invest more in durable assets such as vehicles, have a better access to debt, and have a lower probability of facing financial strain. The results suggest that promoting financial inclusion for low-income populations can improve household wealth accumulation and financial security.
- Published
- 2014