Bank-Branch Supply, Financial Inclusion and Wealth Accumulation
72 Pages Posted: 7 Feb 2014 Last revised: 2 Dec 2019
Date Written: July 15, 2018
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
JEL Classification: G21, G28, D14, D43, J15
Suggested Citation: Suggested Citation