SEMINAR: Access to Banking: Determinants and Benefits

2 PM - room 3G, Department of Economics and Management

Speaker: Mauro Caselli, School of International Studies - University of Trento

Abstract
Using a model of retail banking we consider how mainstream banks price for their deposit services and choose the type of customers that they target. We show that the distribution of income in the consumer population and the rate of return on investments available to banks are important factors in determining the level of financial exclusion. We use three years of localized U.S. consumer data from the FDIC to test our model and to estimate the value of having a checking account. Mainstream banks are found to provide a small but significantly positive benefit to their poorest consumers. We demonstrate how the 2008 financial crisis, through its impact on the interest rate available to banks, may have led to an increase in financial exclusion. We also find that a higher standard deviation of income may lead to a greater percentage of unbanked.