Mainstream Finance: Why Don't the Poor Participate? Evidence from Bank Branching Deregulation in the United States

Claire Celerier and Adrien Matray
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Adrien Matray: GREGH - Groupement de Recherche et d'Etudes en Gestion à HEC - HEC Paris - Ecole des Hautes Etudes Commerciales - CNRS - Centre National de la Recherche Scientifique

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Abstract: This paper studies the impact of financial inclusion on wealth accumulation. Exploiting the US interstate branching deregulation between 1994 and 2005, we find that an exogenous expansion of bank branches increases low-income household financial inclusion. We then show that financial inclusion fosters household wealth accumulation. Relative to their unbanked counterparts, banked households accumulate assets in interest bearing accounts, invest more in durable assets such as vehicles, have a better access to debt, and have a lower probability of facing financial strain. The results suggest that promoting financial inclusion for low-income populations can improve household wealth accumulation and financial security.

Keywords: Banks; Regulation; Imperfect Competition; Household Finance; Discrimination (search for similar items in EconPapers)
Date: 2014-02-07
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Persistent link: https://EconPapers.repec.org/RePEc:hal:wpaper:hal-02058261

DOI: 10.2139/ssrn.2392278

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