The effects of bank and nonbank provider locations on household use of financial transaction services

We examine the influence that geographic proximity to bank branches and nonbank financial providers has on use of financial transaction services among U.S. households. We specify a bivariate probit model of bank account ownership and nonbank transaction product use to reflect the joint nature of these choices, and estimate the model on a large, nationally representative dataset. Our results indicate that households with reasonable geographic access to bank branches are more likely to have a bank account and less likely to use nonbank transaction products. The influence of bank and nonbank provider locations is fairly modest overall, although effects are bigger for households that are more likely to be on the margin of bank account ownership. Even among such households, however, the effects of bank and nonbank provider locations on financial transaction services use are not as large as those associated with key household-level attributes, such as income, education, or race.