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Financial inclusion: what’s it worth?

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  • Ehrmann, Michael
  • Ampudia, Miguel

Abstract

This paper studies the determinants of being unbanked in the euro area and the United States as well as the effects of being unbanked on wealth accumulation. Based on household-level data from the euro area Household Finance and Consumption Survey and the U.S. Survey of Consumer Finance, it first documents that there are, respectively, 3.6% and 7.5% of unbanked households in the two economies. Low-income households, unemployed households and those with a poor education are the most likely to be affected, and remarkably more so in the United States than in the euro area. At the same time, there is a role for government policies in fostering financial inclusion. Using a propensity score matching approach to estimate the effects of being unbanked, it is found that banked households report substantially higher net wealth than their unbanked counterparts, with a gap of around JEL Classification: G21, G28, D14

Suggested Citation

  • Ehrmann, Michael & Ampudia, Miguel, 2017. "Financial inclusion: what’s it worth?," Working Paper Series 1990, European Central Bank.
    • Handle: RePEc:ecb:ecbwps:20171990
    Note: 203739
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    Cited by:

    1. Beatriz Fernández-Olit & Juan Diego Paredes-Gázquez & Marta de la Cuesta-González, 2018. "Are Social and Financial Exclusion Two Sides of the Same Coin? An Analysis of the Financial Integration of Vulnerable People," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 135(1), pages 245-268, January.
    2. Emara, Noha & El Said, Ayah & Pearlman, Joseph, 2019. "On the Impact of Financial Inclusion on Financial Stability and Inequality: The Role of Macroprudential Policies," MPRA Paper 99258, University Library of Munich, Germany.
    3. De Portu, Tommaso, 2022. "New trends in retail payments: How technological changes are reshaping the payments system. Introducing a proposal for a new pan-European instant payment system," Latin American Journal of Central Banking (previously Monetaria), Elsevier, vol. 3(4).
    4. Jérôme Coffinet & Christophe Jadeau, 2017. "Household financial exclusion in the Eurozone: the contribution of the Household Finance and Consumption survey," IFC Bulletins chapters, in: Bank for International Settlements (ed.), Data needs and Statistics compilation for macroprudential analysis, volume 46, Bank for International Settlements.
    5. Oana Mirela Cojocaru (Diaconescu) & Otilia Georgiana Floroiu, 2019. "Financial Inclusion – One Step Closer To The Eurozone?," Oradea Journal of Business and Economics, University of Oradea, Faculty of Economics, vol. 4(2), pages 81-90, September.
    6. Domenica Federico & Maria Adele Milioli & Antonella Notte & Lucia Poletti, 2020. "Financial and Social Inclusion and Financial Sector Development: An Outline in the EU28," American Journal of Economics and Business Administration, Science Publications, vol. 12(1), pages 14-35, January.
    7. Giorgio Nuzzo & Stefano Piermattei, 2019. "Measuring financial inclusion in the main euro area countries: the role of electronic cards," Questioni di Economia e Finanza (Occasional Papers) 504, Bank of Italy, Economic Research and International Relations Area.
    8. B. Fernández-Olit & C. Ruza & M. Cuesta-González & M. Matilla-Garcia, 2019. "Banks and Financial Discrimination: What Can Be Learnt from the Spanish Experience?," Journal of Consumer Policy, Springer, vol. 42(2), pages 303-323, June.

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    More about this item

    Keywords

    financial inclusion; household finance; propensity score matching;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance

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