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Barriers to Immigrant Use of Financial Services The Role of Language Skills, U.S. Experience, and Return Migration Expectations

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  • Silvia Helena Barcellos
  • James P. Smith
  • Joanne K. Yoong
  • Leandro Carvalho

Abstract

Immigrants constitute a rapidly growing share of the U.S. population. However, when compared to natives, foreign-born residents are more likely to be unbanked, less likely to participate in formal retirement savings programs and have lower levels of financial literacy. This project (1) investigated barriers to the use of financial services faced by immigrants and (2) designed and evaluated new financial education materials targeted at immigrants. The authors focused on three potential barriers: limited English proficiency, lack of U.S. experience and return migration expectations. They designed new financial education materials to help immigrants overcome financial participation barriers. Using the RAND American Life Panel they administered two different versions of the educational material to randomly selected test groups – one general version and one including immigrant-specific information — as well as having a control group that received no information. They find that the groups that received the educational intervention were more likely to correctly answer questions on investment and savings strategies, IRA and 401(k) rules and to perform simple interest rates calculations. When questions involved specific immigrant information, the effect was mostly present for the treatment group that received immigrant-specific content. They find little effect of the treatments on financial behavior measures such as probability expectations and choice tasks. Overall, the knowledge outcomes point to the efficacy of this type of educational material in informing respondents with respect to important financial information that they are not familiar with, including information related to their immigrant status. However, they find limited effect on intended behavior change.

Suggested Citation

  • Silvia Helena Barcellos & James P. Smith & Joanne K. Yoong & Leandro Carvalho, 2012. "Barriers to Immigrant Use of Financial Services The Role of Language Skills, U.S. Experience, and Return Migration Expectations," Working Papers WR-923-SSA, RAND Corporation.
    • Handle: RePEc:ran:wpaper:wr-923-ssa
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    References listed on IDEAS

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    1. Catalina Amuedo-Dorantes & Susan Pozo, 2002. "Precautionary Saving by Young Immigrants and Young Natives," Southern Economic Journal, John Wiley & Sons, vol. 69(1), pages 48-71, July.
    2. Deborah A. Cobb‐Clark & Vincent A. Hildebrand, 2006. "The Wealth And Asset Holdings Of U.S.‐Born And Foreign‐Born Households: Evidence From Sipp Data," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 52(1), pages 17-42, March.
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    5. Ana M. Aizcorbe & Arthur B. Kennickell & Kevin B. Moore, 2003. "Recent changes in U.S. family finances: evidence from the 1998 and 2001 Survey of Consumer Finances," Federal Reserve Bulletin, Board of Governors of the Federal Reserve System (U.S.), vol. 89(Jan), pages 1-32, January.
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    7. Sherrie L. W. Rhine & William H. Greene & Maude Toussaint-Comeau, 2006. "The Importance of Check-Cashing Businesses to the Unbanked: Racial/Ethnic Differences," The Review of Economics and Statistics, MIT Press, vol. 88(1), pages 146-157, February.
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    Cited by:

    1. Tim Kaiser & Lukas Menkhoff, 2017. "Does Financial Education Impact Financial Literacy and Financial Behavior, and If So, When?," The World Bank Economic Review, World Bank, vol. 31(3), pages 611-630.
    2. Teodora Cristina Barbu & Iustina Alina Boitan, 2018. "Immigrants’ impact on financial market – European countries’ evidence," Zbornik radova Ekonomskog fakulteta u Rijeci/Proceedings of Rijeka Faculty of Economics, University of Rijeka, Faculty of Economics and Business, vol. 36(1), pages 183-212.
    3. Luisa R. Blanco & Maria Ponce & Arturo Gongora & O. Kenrik Duru, 2015. "A Qualitative Analysis of the Use of Financial Services and Saving Behavior Among Older African Americans and Latinos in the Los Angeles Area," SAGE Open, , vol. 5(1), pages 21582440145, January.

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