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Does Community Access to Alternative Financial Services Relate to Individuals’ Use of These Services? Beyond Individual Explanations

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  • Terri Friedline

    (University of Kansas)

  • Nancy Kepple

    (University of Kansas)

Abstract

There is concern that the increasing number of alternative financial services in communities across the USA is risking individuals’ financial health by increasing their use of these high-cost services. To address this concern, this study used restricted-access, zip code data from nationally representative samples of adult individuals and examined associations between the density or concentration of alternative financial services within communities and individuals’ use of these services. The associations between community density and individuals’ use varied by annual household income: Communities’ higher density of alternative financial services was associated with the increased probability that modest- and highest-income individuals ever used these services, while higher density was associated with more chronic use among lowest-income individuals. State regulation that prohibited payday lenders had a protective association for modest- and highest-income individuals but had no effect for lowest-income individuals. Policy implications are discussed.

Suggested Citation

  • Terri Friedline & Nancy Kepple, 2017. "Does Community Access to Alternative Financial Services Relate to Individuals’ Use of These Services? Beyond Individual Explanations," Journal of Consumer Policy, Springer, vol. 40(1), pages 51-79, March.
    • Handle: RePEc:kap:jcopol:v:40:y:2017:i:1:d:10.1007_s10603-016-9331-y
    DOI: 10.1007/s10603-016-9331-y
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    4. Zibei Chen & Terri Friedline & Catherine M. Lemieux, 2022. "A National Examination on Payday Loan Use and Financial Well-being: a propensity score matching Approach," Journal of Family and Economic Issues, Springer, vol. 43(4), pages 678-689, December.
    5. Ryan M. Goodstein & Alicia Lloro & Sherrie L.W. Rhine & Jeffrey M. Weinstein, 2021. "What accounts for racial and ethnic differences in credit use?," Journal of Consumer Affairs, Wiley Blackwell, vol. 55(2), pages 389-416, June.
    6. Irene Herremans & Peggy Hedges & Fereshteh Mahmoudian & Anne Kleffner & Mahrukh Tahir, 2023. "The Paradox of the Payday Borrower: A Case Study of the Role of Planned Behavior in Borrowers’ Motivations and Experiences," JRFM, MDPI, vol. 16(5), pages 1-24, April.
    7. Megan Doherty Bea, 2023. "Relational foundations of an unequal consumer credit market: Symbiotic ties between banks and payday lenders," Journal of Consumer Affairs, Wiley Blackwell, vol. 57(1), pages 320-345, January.
    8. J. Birkenmaier & Q. Fu, 2019. "Does U.S. Household Financial Access Mediate the Relationship Between a Large Income Drop and Credit Record?," Journal of Consumer Policy, Springer, vol. 42(2), pages 267-283, June.
    9. Ian Dunham & Alec Foster, 2023. "FRINGE FINANCIAL ECOLOGIES AND PLACE‐BASED EXCLUSION: A Tale of Two Cities," International Journal of Urban and Regional Research, Wiley Blackwell, vol. 47(6), pages 881-898, November.
    10. David W. Rothwell & Leanne Giordono & Robert S. Stawski, 2022. "How Much Does State Context Matter in Emergency Savings? Disentangling the Individual and Contextual Contributions of the Financial Capability Constructs," Journal of Family and Economic Issues, Springer, vol. 43(4), pages 703-715, December.
    11. Mathieu R. Despard & Terri Friedline & Stacia Martin-West, 2020. "Why Do Households Lack Emergency Savings? The Role of Financial Capability," Journal of Family and Economic Issues, Springer, vol. 41(3), pages 542-557, September.
    12. P. Hohnen & A. Rhiger Hansen, 2021. "Credit Consumption and Financial Risk Among Danish Households— A Register-Based Study of the Distribution of Bank and Credit Card Debt," Journal of Consumer Policy, Springer, vol. 44(2), pages 311-328, June.
    13. Megan Doherty Bea & K. Bley, 2022. "(Un)conditional consumer protections in high‐cost lending regulation: Impacts on local lending geographies," Journal of Consumer Affairs, Wiley Blackwell, vol. 56(4), pages 1561-1596, December.

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