Seven percent of U.S. households are "unbanked," meaning they have no bank or credit union account. Researchers at the Federal Reserve Bank of New York examined the geography of the unbanked to determine the reason why—in particular, they wanted to know whether households lack bank accounts because they live in a "banking desert." Similar to food deserts (neighborhoods without grocery stores), banking deserts are neighborhoods without physical banks. In the study, the researchers defined a neighborhood as a census tract and the area within 10 miles of the census tract's center.
Several interesting findings emerged from the study. 1) Most banking deserts are in actual deserts. "Our map of U.S. banking deserts reveals that most are not in urban areas, where financial exclusion may be endemic, but in actual deserts—largely in the sparsely populated rural West," explain the researchers. 2) There is no correlation between the percentage of a state's population that lives in a banking desert and the share of the population that is unbanked. The physical location of banks, then, does not explain the unbanked. The results of a 2015 FDIC survey, cited by the researchers, also suggests physical location of banks has little to do with the unbanked. In the survey, the unbanked were asked why they did not have a bank account. Only 2 percent said it was because of "inconvenient location." More important reasons were "not enough money," "don't trust banks," and "account fees too high."
Source: Federal Reserve Bank of New York, Liberty Street Economics, The 'Banking Desert' Mirage
1 comment:
I wonder how many of that 7% choose not to have a bank account because they are off-the-grid economically. SSI recipients are severely restricted in how much they can have in a bank account before significant cuts to their income kick in. Many choose to skip a bank account entirely.
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