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Ethnic Concentration and Bank Use in Immigrant Communities

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  • Sarah Bohn
  • Sarah Pearlman

Abstract

Despite the many benefits of bank use, large portions of the U.S. population remain unbanked. One of the largest is immigrants, where the incidence of being unbanked is over 13% higher than among natives in 2001. We document growth in the nativity gap in bank use over time. We also test the importance of immigrant enclaves, defined as areas with high concentrations of immigrants from the same region, in explaining the increasing differential in bank use. Combining data from the Survey of Income and Program Participation, Census, and FDIC we find that immigrants living in enclaves are significantly less likely to have a bank account. We take steps to isolate one particular channel through which this might operate: the use of informal financial services provided by co‐ethnics in enclaves. The results suggest that demand‐side preferences may have power in explaining the persistence of the nativity gap in bank use in the United States.

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  • 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.
    • Handle: RePEc:wly:soecon:v:79:y:2013:i:4:p:864-885
    DOI: 10.4284/0038-4038-2010.245
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    2. Argudo, Esteban, 2024. "Wealth and the nativity earnings gap," Economics Letters, Elsevier, vol. 241(C).
    3. Liliana Sousa, 2013. "Community Determinants Of Immigrant Self-Employment: Human Capital Spillovers And Ethnic Enclaves," Working Papers 13-21, Center for Economic Studies, U.S. Census Bureau.
    4. Antonieta Castro-Cosío, 2024. "‘Informal’ Financial Practices in the South Bronx: Family, Compadres, and Acquaintances," Journal of Family and Economic Issues, Springer, vol. 45(2), pages 327-342, June.
    5. 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.

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