ESRI Seminar: "Financial Inclusion—What’s it Worth?"

Speaker: Michael Ehrmann, European Central Bank

Venue: ESRI, Whitaker Square, Sir John Rogerson’s Quay, Dublin 2

The paper studies the determinants of being unbanked and its effects on wealth accumulation in the euro area and the United States. Based on household survey data, it documents that 3.6% and 7.5% of households are unbanked in the two economies, mainly those with low incomes, in unemployment and with a poor education. At the same time, there is a role for government policies in fostering financial inclusion. Using propensity score matching, we find that banked households report substantially higher net wealth than their unbanked counterparts, with a gap of around €74,000 and $42,000, mainly due to differences in real asset holdings. The wealth gap is typically larger in countries that have a smaller share of unbanked households, suggesting that more efficient workarounds exist in countries where being unbanked is relatively more common.

Download the paper here.

Download presentation slides here.