Resilient in the Midst of Financial Change

A Geographic Investigation of Brick-and-Mortar Financial Services and Household's Financial Health
Policy Paper
Feb. 1, 2017

A household with good financial health owns basic financial products and uses these products to navigate their day-to-day financial needs, such as managing and paying their bills. However, one potential pitfall that households may face as they try to navigate their finances is that certain types of financial services may not be readily available in communities where they live. For example, the availability of banks, credit unions, or alternative financial service (AFS) providers in a household's community may be limited. Hence, a household may be drawn to certain types of financial services that may improve or impede their ability to sustain good financial health, depending on the services that are most geographically convenient. 

This study used data on financial services, individual/household and community demographics (including smartphone use), and household financial health to test whether the geographic concentrations or densities of bank and credit union branches and AFS providers within communities were associated with households' financial health. We used two measures of financial services: the numbers of financial services per 1,000 population, or densities, and the composition of financial services densities reveal to one another. We explored these associations by income as the availability of financial services within communities varies based on household income levels.

The findings from this study are not intended to be used for drawing clear prescriptions about building brick-and-mortar branches in communities. Instead, these findings offer preliminary understandings of whether the availability of financial services in communities relates to households' financial health, for which households, and under which conditions.