The Effects of Bank and Nonbank Provider Locations on Household Use of Financial Transaction Services

46 Pages Posted: 18 Aug 2016 Last revised: 19 Aug 2016

See all articles by Ryan Goodstein

Ryan Goodstein

FDIC Division of Depositor and Consumer Protection

Sherrie L.W. Rhine

Federal Deposit Insurance Corporation

Date Written: February 1, 2016

Abstract

We examine the influence that geographic proximity to bank branches and (nonbank) alternative financial services providers has on use of financial transaction services among U.S. households. We specify a bivariate probit model of bank account ownership and use of nonbank transaction products to reflect the joint nature of these choices, and estimate the model on a large, nationally representative dataset. Our results indicate that households with reasonable geographic access to bank branches are more likely to have a bank account and less likely to use nonbank transaction products. Although the influence of bank and nonbank provider locations is fairly modest overall, effects are bigger for certain subgroups more likely to be on the margin of bank account ownership. However, even among such households, the effects of bank and nonbank provider locations on financial transaction services use are not as large as those associated with key household-level attributes, such as income, education, or race.

Suggested Citation

Goodstein, Ryan and Rhine, Sherrie L.W., The Effects of Bank and Nonbank Provider Locations on Household Use of Financial Transaction Services (February 1, 2016). FDIC Division of Depositor & Consumer Protection Working Paper No. 2016-01, Available at SSRN: https://ssrn.com/abstract=2826059 or http://dx.doi.org/10.2139/ssrn.2826059

Ryan Goodstein (Contact Author)

FDIC Division of Depositor and Consumer Protection ( email )

550 17th Street, NW
Washington, DC 20429
United States

Sherrie L.W. Rhine

Federal Deposit Insurance Corporation ( email )

550 17th Street, NW
Washington, DC 20429
United States

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