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The Impact of Banking and Fringe Banking Regulation on the Number of Unbanked Americans

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  • Ebonya Washington

Abstract

Thirty-five to 45 percent of low-income American households do not possess a bank account. This statistic coupled with claims of price gouging by check cashers has prompted government intervention. I find that state legislation requiring banks to offer low-cost accounts slightly decreases the number of low-income minority unbanked households, but only with a substantial lag. Caps on check-cashing fees also lead to a small, but more immediate, reduction in the number of unbanked among this population. Because price caps may lead to a reduction in supply, welfare effects are indeterminate.

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  • Ebonya Washington, 2006. "The Impact of Banking and Fringe Banking Regulation on the Number of Unbanked Americans," Journal of Human Resources, University of Wisconsin Press, vol. 41(1).
    • Handle: RePEc:uwp:jhriss:v:41:y:2006:i:1:p106-137
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    Cited by:

    1. Felipe Kast & Dina Pomeranz, 2013. "Saving More to Borrow Less: Experimental Evidence from Access to Formal Savings Accounts in Chile," Harvard Business School Working Papers 14-001, Harvard Business School, revised Jun 2014.
    2. Eoin McLaughlin & Rowena Pecchenino, 2022. "Fringe banking and financialization: Pawnbroking in pre‐famine and famine Ireland," Economic History Review, Economic History Society, vol. 75(3), pages 903-931, August.
    3. Smriti Rao & Hazel Malapit, 2015. "Gender, Household Structure and Financial Participation in the United States," Journal of Family and Economic Issues, Springer, vol. 36(4), pages 606-620, December.
    4. Sarah Bohn & Sarah Pearlman, 2013. "Ethnic Concentration and Bank Use in Immigrant Communities," Southern Economic Journal, John Wiley & Sons, vol. 79(4), pages 864-885, April.
    5. Katie Fitzpatrick, 2015. "Does “Banking the Unbanked” Help Families to Save? Evidence from the United Kingdom," Journal of Consumer Affairs, Wiley Blackwell, vol. 49(1), pages 223-249, March.
    6. Miguel Ampudia & Michael Ehrmann, 2016. "Financial Inclusion—What’s it Worth?," Staff Working Papers 16-30, Bank of Canada.
    7. J. Michael Collins & Jeff Larrimore & Carly Urban, 2021. "Does Access to Bank Accounts as a Minor Improve Financial Capability? Evidence from Minor Bank Account Laws," Finance and Economics Discussion Series 2021-075, Board of Governors of the Federal Reserve System (U.S.).
    8. Kristin Turney & Daniel Schneider, 2016. "Incarceration and Household Asset Ownership," Demography, Springer;Population Association of America (PAA), vol. 53(6), pages 2075-2103, December.
    9. Craig Gundersen & David R. Just & Katie Fitzpatrick, 2017. "Bank Accounts, Nonbank Financial Transaction Products, and Food Insecurity among Households with Children," Journal of Consumer Affairs, Wiley Blackwell, vol. 51(3), pages 631-658, November.
    10. Judy Postmus & Sara-Beth Plummer & Sarah McMahon & Karen Zurlo, 2013. "Financial Literacy: Building Economic Empowerment with Survivors of Violence," Journal of Family and Economic Issues, Springer, vol. 34(3), pages 275-284, September.
    11. Jesse Leigh Maniff & W. Blake Marsh, 2017. "Banking on Distributed Ledger Technology: Can It Help Banks Address Financial Inclusion?," Economic Review, Federal Reserve Bank of Kansas City, issue Q III, pages 53-77.
    12. J. Michael Collins & Madelaine L’Esperance, 2023. "What do students gain from banks in schools? A field study," Review of Economics of the Household, Springer, vol. 21(2), pages 567-590, June.
    13. Jennifer L. Dlugosz & Brian T. Melzer & Donald P. Morgan, 2021. "Who Pays the Price? Overdraft Fee Ceilings and the Unbanked," Staff Reports 973, Federal Reserve Bank of New York.
    14. Gandelman, Néstor & Lluberas, Rodrigo & Misail, Daniel & IDB Invest, 2023. "The Impact of a Financial Inclusion Program on Household’s Payment Choice, Savings, and Credit," IDB Publications (Working Papers) 12769, Inter-American Development Bank.
    15. Giorgia Barboni & Alessandra Cassar & Timothee Demont, 2017. "Financial exclusion in developed countries: a field experiment among migrants and low-income people in Italy," Journal of Behavioral Economics for Policy, Society for the Advancement of Behavioral Economics (SABE), vol. 1(2), pages 39-49, September.
    16. 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.
    17. Luisa Blanco & Salvador Contreras & Amit Ghosh, 2022. "Impact of Great Recession bank failures on use of financial services among racial/ethnic and income groups," Southern Economic Journal, John Wiley & Sons, vol. 88(4), pages 1574-1598, April.
    18. N. D. Albers & A. O. Wren & T. L. Knotts & M. G. Chupp, 2021. "Consumer Perceptions and Pricing Practices for Weddings," Journal of Consumer Policy, Springer, vol. 44(3), pages 407-426, September.
    19. Katie Fitzpatrick, 2015. "The effect of bank account ownership on credit and consumption: Evidence from the UK," Southern Economic Journal, John Wiley & Sons, vol. 82(1), pages 55-80, July.
    20. Rouse, Marybeth & Batiz-Lazo, Bernardo & Carbo Valverde, Santiago, 2020. "All about the state-Fifty years of innovative technology to deliver an inclusive financial sector," MPRA Paper 102159, University Library of Munich, Germany.

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