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Friday, September 8 • 10:07am - 10:39am
Digital and Economic Inclusion: How Internet Adoption Impacts Banking Status

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Access to banking and other traditional financial services is critical to economic security and stability in the 21st century. The ability to build and access credit and savings are essential to daily tasks, as well as buying a home, planning for retirement, and growing a small business. According to a 2015 Federal Deposit Insurance Corporation (FDIC) survey, however, 7 percent of U.S. households were unbanked and 20 percent were considered underbanked. Financial technology (FinTech), including mobile money services, peer-to-peer lending, and mobile insurance is promised as a means to economic inclusion for the un(der)banked. Nonetheless, these online financial services require Internet access, adoption, and digital literacy. As National Telecommunications and Information Administration’s (NTIA) 2015 survey shows, the digital divide persists. In 2015, 27 percent of U.S. households did not access the Internet at home and 21 percent of households did not access the Internet anywhere.

In order to explore the interdependencies between banking and Internet adoption in the United States, this paper merges datasets from FDIC’s June 2015 Unbanked and Underbanked survey and NTIA’s July 2015 Computer and Internet Use survey to study the issue more closely. Both surveys are supplements to the U.S. Census’s monthly Current Population Survey (CPS) survey from consecutive months, which enables us to take advantage of the longitudinal aspects of the CPS panel of households. At the household level, approximately 35,000 households completed both the NTIA and FDIC surveys.

While the process of merging CPS supplements at the household level is fairly straightforward, treating sampling weights and variance raises some complications. Census uses weights to account for factors such as under or over sampling to ensure that survey results accurately represent the U.S. population. These weights change over time with variations in the sample, so we must create new weights to account for the distribution of the longitudinally merged sample. Our paper provides a methodology for merging CPS supplements and addressing these issues. This approach will hopefully assist future researchers in exploring similar intersectional issues.

Our results show that there is a relationship between households’ Internet connected device use and their banking status. Our preliminary results suggest: (1) there is a strong correlation between the un(der)banked and un(der)connected; (2) even when holding demographic factors constant, un(der)banked households also use fewer device types; and 3) households using a single device type, particularly smartphone-only, are less likely to engage in certain financial activities, such as direct deposit.

FinTech promises to bring economic inclusion to un(der)banked populations. Our research suggests, however, that these populations are also often less digitally connected than other groups. Reaching these underserved communities could require a combination of financial and digital literacy services


Chris Mcgovern

Connected Nation, Inc

Friday September 8, 2017 10:07am - 10:39am EDT
ASLS Hazel - Room 120