Growing up without finance

James Brown (), J. Anthony Cookson and Rawley Z. Heimer

Journal of Financial Economics, 2019, vol. 134, issue 3, 591-616

Abstract: Early life exposure to local financial institutions increases household financial inclusion and leads to long-term improvements in consumer credit outcomes. We identify the effect of local financial markets using Congressional legislation that led to unintended differences in financial market development across Native American reservations. Individuals from financially underdeveloped reservations enter consumer credit markets later, and upon reaching adulthood, have ten point lower credit scores and four percentage point more delinquent accounts. These effects are long-lived and depreciate slowly after individuals move to more developed areas. Formative exposures to local banking improve consumer credit behavior by increasing financial literacy and financial trust.

Keywords: Household finance; Native American reservations; Formative exposures; Financial development; Local banking (search for similar items in EconPapers)
JEL-codes: G21 K40 P48 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (42)

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Working Paper: Growing Up without Finance (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jfinec:v:134:y:2019:i:3:p:591-616

DOI: 10.1016/j.jfineco.2019.05.006

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