The Effects of Bank and Nonbank Provider Locations on Household Use of Financial Transaction Services
46 Pages Posted: 18 Aug 2016 Last revised: 26 Apr 2017
Date Written: February 1, 2016
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: Suggested Citation