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Household Financial Access and Use of Alternative Financial Services in the U.S.: Two Sides of the Same Coin?

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  • Julie Birkenmaier

    (College for Public Health and Social Justice)

  • Qiang Fu

    (College for Public Health and Social Justice)

Abstract

Financial access, or the household use of formal financial services, includes the ability to access transaction, credit, and investment products and services from formal financial institutions. In contrast, households that use Alternative Financial Services (AFS), or products and services from non-bank sources, lack full financial access and are considered financially excluded. Financial access is a necessary component of strong household financial well-being. Some researchers discuss the two as opposite sides of the same construct, or “two sides of the same coin” because they are closely related features of one idea. Using national data from the 2015 Financial Capability Study (n = 27,564), this study sought to explore the nature of the relationship between financial access and AFS use using confirmatory factor analysis. Results suggest that the two concepts are weakly and positively related, which suggests that they are not “two sides of the same coin”. The determinates of AFS use are complex, and may include social factors. A holistic approach to expanding financial access may be most effective. Policy implications are also discussed.

Suggested Citation

  • Julie Birkenmaier & Qiang Fu, 2018. "Household Financial Access and Use of Alternative Financial Services in the U.S.: Two Sides of the Same Coin?," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 139(3), pages 1169-1185, October.
    • Handle: RePEc:spr:soinre:v:139:y:2018:i:3:d:10.1007_s11205-017-1770-6
    DOI: 10.1007/s11205-017-1770-6
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    References listed on IDEAS

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    4. Shahid Manzoor Shah & Amjad Ali, 2022. "A Survey on Financial Inclusion: Theoretical and Empirical Literature Review," Journal of Policy Research (JPR), Research Foundation for Humanity (RFH), vol. 8(4), pages 310-330, December.
    5. Kyoung Tae Kim & Soo Hyun Cho & Sharon A. DeVaney, 2021. "Racial/ethnic differences in holding a retirement saving motive: A decomposition analysis," Journal of Consumer Affairs, Wiley Blackwell, vol. 55(2), pages 464-482, June.
    6. Hayashi, Fumiko & Routh, Aditi & Toh, Ying Lei, 2024. "Heterogeneous unbanked households: Which types of households are more (or less) likely to open a bank account?," Journal of Economics and Business, Elsevier, vol. 129(C).
    7. Ian Dunham & Alec Foster, 2023. "FRINGE FINANCIAL ECOLOGIES AND PLACE‐BASED EXCLUSION: A Tale of Two Cities," International Journal of Urban and Regional Research, Wiley Blackwell, vol. 47(6), pages 881-898, November.
    8. J. Michael Collins & Sarah Halpern-Meekin & Melody Harvey & Jill Hoiting, 2023. "“I Don’t Like All Those Fees” Pragmatism About Financial Services Among Low-Income Parents," Journal of Family and Economic Issues, Springer, vol. 44(4), pages 807-820, December.
    9. Aswini Kumar Mishra & Vedant Bhardwaj, 2022. "The Determinants of Access to Informal Credits in India: An Application of Quantiles via Moments Method," Journal of Quantitative Economics, Springer;The Indian Econometric Society (TIES), vol. 20(1), pages 1-22, March.
    10. P. M. Vik & D. Kamerāde & K. T. Dayson, 2024. "The Link Between Digital Skills and Financial Inclusion—Evidence from Consumers Survey Data from Low-Income Areas," Journal of Consumer Policy, Springer, vol. 47(3), pages 373-393, September.
    11. Anderson, Michael H. & Jackson, Raymond, 2021. "Option value and auto title loans," Journal of Economics and Business, Elsevier, vol. 117(C).
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