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Household Financial Access and Use of Alternative Financial Services in the U.S.: Two Sides of the Same Coin?

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Abstract

Financial access, or the household use of formal financial services, includes the ability to access transaction, credit, and investment products and services from formal financial institutions. In contrast, households that use Alternative Financial Services (AFS), or products and services from non-bank sources, lack full financial access and are considered financially excluded. Financial access is a necessary component of strong household financial well-being. Some researchers discuss the two as opposite sides of the same construct, or “two sides of the same coin” because they are closely related features of one idea. Using national data from the 2015 Financial Capability Study (n = 27,564), this study sought to explore the nature of the relationship between financial access and AFS use using confirmatory factor analysis. Results suggest that the two concepts are weakly and positively related, which suggests that they are not “two sides of the same coin”. The determinates of AFS use are complex, and may include social factors. A holistic approach to expanding financial access may be most effective. Policy implications are also discussed.

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  1. Saint Louis University School of Social Work, College for Public Health and Social Justice, 3550 Lindell Blvd., St Louis, MO, 63103, USA

    Julie Birkenmaier

  2. Saint Louis University School of Public Health, College for Public Health and Social Justice, 3545 Lafayette Ave., St Louis, MO, 63104, USA

    Qiang Fu

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Birkenmaier, J., Fu, Q. Household Financial Access and Use of Alternative Financial Services in the U.S.: Two Sides of the Same Coin?. Soc Indic Res 139, 1169–1185 (2018). https://doi.org/10.1007/s11205-017-1770-6

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