Does Prior Banking Experience Matter? Differences of the Banked and Unbanked in Individual Development Accounts
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Using data from the 4-year American Dream Demonstration, this study compares saving performance and program participation of banked (n = 1,538) and unbanked participants (n = 466) enrolled in 14 IDA programs. The study shows banked participants had $2.74 higher average monthly net deposit (p < 0.05); 5% higher deposit frequency (p < 0.001); and 42% less odds of drop out than unbanked participants (p < 0.001). Moreover, program characteristics such as financial education, monthly saving targets, peer group meetings, and direct deposit are important predictors of program performances. Individual characteristics such as race/ethnicity, home ownership, and income are significantly associated with program performance.
KeywordsAsset building Banked IDAs Savings Unbanked
The authors wish to thank the following foundations for support of this paper: the Ford Foundation, Charles Stewart Mott Foundation, FB Heron Foundation, and Metropolitan Life Foundation for funding ADD research; HUD for the Early Dissertation Grant; the IDA program staff at the 14 research sites of the American Dream Demonstration (ADD); the Corporation for Enterprise Development for implementing ADD; Michael Sherraden, director of the Center for Social Development, Lissa Johnson, ADD research project manager; Margaret Clancy, for ensuring quality of the monitoring data; and Mark Schreiner for data management and preparation. Finally, the paper greatly benefited from the comments of Diane Wyant, Susanna Birdsong, and Roderick Rose.
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