66 Pages Posted: 14 Jul 2016 Last revised: 7 Feb 2017
Date Written: September 8, 2016
Early-life exposure to local financial institutions increases household financial inclusion and improves financial health thereafter. We identify the effect of local financial markets using an externally-imposed law that led to sharp differences in credit market development across Native American reservations. Individuals who grow up on financially underdeveloped reservations enter formal credit markets later than individuals from financially developed reservations, and as a result, have persistently lower credit scores. Although financial health improves after moving from a reservation, it takes longer than a decade for the credit scores of individuals leaving financially underdeveloped areas to converge with other borrowers.
Keywords: Household finance, Law and finance, Consumer credit, Early-life experiences, Banking development
JEL Classification: G21, K40, P48
Suggested Citation: Suggested Citation
Brown, James R. and Cookson, J. Anthony and Heimer, Rawley, Growing Up Without Finance (September 8, 2016). 7th Miami Behavioral Finance Conference 2016. Available at SSRN: https://ssrn.com/abstract=2809164 or http://dx.doi.org/10.2139/ssrn.2809164