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Make the Invisible Underbanked Visible: Who Are the Underbanked?

Make the Invisible Underbanked Visible: Who Are the Underbanked? When the COVID-19 pandemic caused businesses to close and triggered high unemployment in 2020, millions of unbanked U.S. households, those without a bank account, had to wait for weeks and months for their stimulus checks to arrive. The delayed delivery of stimulus checks issued by the Coronavirus Aid, Relief, and Economic Security (CARES) Act sheds light on the critical role that safe, affordable financial services and products play in people’s ability to cope with financial shocks. Dialogues over banking practices have been framed with a banked-unbanked dichotomous framework that masks more nuanced understandings of households’ financial realities, including the underbanked, who use a bank account and alternative financial services simultaneously. Using data from the 2015 National Financial Capability Study, this study identifies and compares predictors of being underbanked and unbanked, respectively. We found that the underbanked group is a sizable, distinctively different group. Income volatility and welfare benefit receipt are both associated with being underbanked rather than unbanked. Our findings call for expanding the current, limited framework to gain more complete, nuanced understandings of banking practices. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Financial Counseling and Planning Springer Publishing

Make the Invisible Underbanked Visible: Who Are the Underbanked?

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Publisher
Springer Publishing
Copyright
© 2022 Springer Publishing Company
ISSN
1052-3073
eISSN
1947-7910
DOI
10.1891/jfcp-2021-0046
Publisher site
See Article on Publisher Site

Abstract

When the COVID-19 pandemic caused businesses to close and triggered high unemployment in 2020, millions of unbanked U.S. households, those without a bank account, had to wait for weeks and months for their stimulus checks to arrive. The delayed delivery of stimulus checks issued by the Coronavirus Aid, Relief, and Economic Security (CARES) Act sheds light on the critical role that safe, affordable financial services and products play in people’s ability to cope with financial shocks. Dialogues over banking practices have been framed with a banked-unbanked dichotomous framework that masks more nuanced understandings of households’ financial realities, including the underbanked, who use a bank account and alternative financial services simultaneously. Using data from the 2015 National Financial Capability Study, this study identifies and compares predictors of being underbanked and unbanked, respectively. We found that the underbanked group is a sizable, distinctively different group. Income volatility and welfare benefit receipt are both associated with being underbanked rather than unbanked. Our findings call for expanding the current, limited framework to gain more complete, nuanced understandings of banking practices.

Journal

Journal of Financial Counseling and PlanningSpringer Publishing

Published: Jul 8, 2022

References