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Are Social and Financial Exclusion Two Sides of the Same Coin? An Analysis of the Financial Integration of Vulnerable People

Author

Listed:
  • Beatriz Fernández-Olit

    (Universidad Nacional de Educación a Distancia)

  • Juan Diego Paredes-Gázquez

    (Universidad Nacional de Educación a Distancia)

  • Marta de la Cuesta-González

    (Universidad Nacional de Educación a Distancia)

Abstract

The economic crisis has increased the inequality and heterogeneity of people at risk of social exclusion, and thus their financial vulnerability. This article reviews the literature on the determinants of unbanking and underbanking and proposes a model linking financial and social exclusion. We aimed to determine if people at risk of poverty and social exclusion are integrated -and to what extent- in the financial system. To answer this question, we identified the demographic and the social exclusion factors that determine both the status of financial vulnerability and the use of banking services. We used multivariate analysis methods to analyze the information from the survey on social vulnerability conducted by the Red Cross Spain in 2015. Our results show a negative relationship between the risk of social exclusion and the intensity of use of banking services. This can lead to financial vulnerability and exclusion in the most extreme situations. We suggest that underbanking is the most relevant—but not previously studied- situation of financial vulnerability in Europe and discuss its implications for policymakers. This paper contributes to the measurement of the link between financial and social exclusion, and is the first quantitative study on the use of banking products by vulnerable people in a European context.

Suggested Citation

  • Beatriz Fernández-Olit & Juan Diego Paredes-Gázquez & Marta de la Cuesta-González, 2018. "Are Social and Financial Exclusion Two Sides of the Same Coin? An Analysis of the Financial Integration of Vulnerable People," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 135(1), pages 245-268, January.
    • Handle: RePEc:spr:soinre:v:135:y:2018:i:1:d:10.1007_s11205-016-1479-y
    DOI: 10.1007/s11205-016-1479-y
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    Cited by:

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    2. Vieira, Kelmara Mendes & Potrich, Ani Caroline Grigion & Bressan, Aureliano Angel & Klein, Leander Luiz, 2021. "Loss of financial well-being in the COVID-19 pandemic: Does job stability make a difference?," Journal of Behavioral and Experimental Finance, Elsevier, vol. 31(C).
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    5. B. Fernández-Olit & C. Ruza & M. Cuesta-González & M. Matilla-Garcia, 2019. "Banks and Financial Discrimination: What Can Be Learnt from the Spanish Experience?," Journal of Consumer Policy, Springer, vol. 42(2), pages 303-323, June.

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    More about this item

    Keywords

    Social exclusion; Financial vulnerability; Consumer vulnerability; Banking services; Unbanking; Underbanking;
    All these keywords.

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • A13 - General Economics and Teaching - - General Economics - - - Relation of Economics to Social Values
    • E - Macroeconomics and Monetary Economics
    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being

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