Understanding Bancarization:

Findings from a Survey of Migrant Remitters in the Washington, DC Metro Area

Alice Chan, Yvonne Chen, Dawn Gable, Braden Webb, and Jeremy Williamson

December 13, 2011

IAFF 6358 Remittances, Migration, and Development

Fall 2011

The George Washington University

1

Abstract

This paper is based off of data from an original survey study of 241 remittance-sending migrants that live in the Washington, DC metropolitan area. The paper offers a description of this sample population, a description of the methods and limitations of this survey study, and a topical literature review and analysis of the relationship between bancarization and four variables (age, length of stay in the host country, education level and legal status). The topical analysis employs bivariate analysis methods. The authors confirm and extend the findings that are prevalent in the literature: having a bank has a positive relationship with age, length of stay in the host country, education level and legal status.

Introduction

The issue of remittances and the vital role that they play in the lives of the United States

migrant population and their families has been of particular interest to US policymakers, and

with good reason. Workers’ remittances, as defined by the International Monetary Fund (IMF) in

the Balance of Payments Manual, 6th edition (IMF 2010a), are current private transfers from

migrant workers who are considered residents of the host country to recipients in the workers’

country of origin. If the migrants live in the host country for one year or longer, they are

considered residents, regardless of their immigration status. If the migrants have lived in the host

country for less than one year, their entire income in the host country should be classified as

compensation of employees. Remittances are important to policymakers who are concerned with

fiscal policy because the sheer amount of money that is habitually sent is large -- worldwide

remittance flows are estimated to have exceeded $440 billion in 2010, of which developing

countries received $325 billion (World Bank 2011, 262).

The survey study that the class conducted this semester had the objective of gathering

information on a sample migrant population in the Washington, D.C. metropolitan area. The

survey explores a number of issues, including how much money the average remitting

interviewee sends and how frequently he or she sends it to their countries of origin,

2

internet/technology use, potential future plans of returning to his or her home country, education

level, English usage, effects of the recent economic crisis, and bancarization/financial access.

Our group chose to further examine the correlation between bancarization, which is the level of

access to and degree of formal financial services, as the independent variable, and four

dependent variables: age, length of time in the US, education level, and legal status. This

investigation is an important one because of the implications that higher levels of banking access

have on development and the global market as a whole`.

For the purposes of our topical analysis, having a bank account (bancarization, being

banked) is associated with people who answered positively about having a bank account. Length

of stay refers to the value response to “How long have you been in the United States?”

Educational attainment and education level refer to one of four possible options (completed

primary school, completed junior high school, completed high school, completed college or

higher). Legal status refers to having legal permission to stay in the United States and includes

TIPS, permanent residents and citizens -- whereas lack of legal status refers to undocumented

immigrants who risk deportation. In the literature review, bancarization is defined more broadly,

as a level of access to, and the degree of ownership of formal financial services; unbanked refers

to people without bank accounts; and the underbanked are people that might have a savings or

checking account but also rely on other financial services. The key research question is: What is

the relationship between having a bank account and age, length of stay in the United States, high

school education completion and having legal status? The hypothesis is that there is a positive

correlation between bank account ownership and these four variables. The method of analysis is

bivariate analysis.

Research Methods and Limitations

3

This study is an original survey study of 241 remittance-sending migrants in the

Washington, DC metropolitan area. 17 students interviewed a total of 241 remittance-sending

migrants in October 2011. The interviewers entered the data into an Excel spreadsheet that Dr.

Orozco provided, which they and Dr. Orozco’s assistant, Mariellen Malloy Jewers, consolidated

and cleaned after discussing the data entry errors in class.

The interviewers used an intercept sampling method. The interviews were conducted

randomly to ensure that the information provided was not biased. Two filter questions ensured a

representative sample. They were: Are you a migrant? Do you send remittances? Each

interviewer attempted to survey every second migrant that passes by his/her designated locations

(see appendix for locations). If the second person asked to do the survey declined, the

interviewer asked the next person whom he/she thought was a migrant, until the survey was

completed. Then, the interviewer again resumed asking the second person. In some instances, the

interviewers adjusted the number of people they counted, but the random sampling method

remained intact.

The sample size of 241 (N=241) is intended to give clues about the target population that

students in Dr. Orozco’s Remittances and Migration class studied in the literature during the fall

2011 semester. The 17 interviewers were master’s graduate students, with legible handwriting, of

good demeanor and were comfortable speaking with strangers. The Latino migrant interviews

were conducted in Spanish by Spanish-speaking interviewers and were the only interviews that

were conducted in a second language.

The 32 item questionnaire is structured in four sections: remittances, financial services,

demographics and effects of the economic crisis on migrants. The questionnaire consisted of four

types of questions: single response, multiple response, value questions (e.g. income, age) and

4

filter/contingency questions (questions asked depending on the response from a previous

question) (see appendix for the complete questionnaire).

For the results section of this paper, the authors of this paper compiled the univariate

statistics (median, mean, mode) for each of the survey questions. For the discussion/findings

section of this paper, the group used bivariate analysis methods. The group measured

correlations for the independent variable (bancarization) against one dependent variable at a

time, for a total of four dependent variables. The four dependent variables are: age, length of stay

in the United States, educational attainment and legal status. The contingency tables presented in

the discussion/findings section of this paper are based on cross-tabulation. Contingency tables

were formed by cross-tabulating two or more variables. The raw counts (frequencies) are

presented in these tables as percentages to see bivariate relationships. The independent variable

is represented by the column (bivariate table using column-percentaged method). The group used

the ‘circle-the-largest-cell rule’ to look for the largest percentage in each row. The group

compared across rows to look for strong relationships. Linear relationships are identified by

looking at larger percentages in the diagonal cells. If there is no relationship, the cell

percentages look approximately equal across rows. Limitations to the research in our topical

analysis included the intervention of confounding factors: the time of day of interview (we

interviewed people during the day, therefore excluding all people who worked at night) and the

lack of standard interview style (there were 17 interviewers versus one interviewer). There were

also several no responses or missing data that narrowed the size of our sample further.

5

Description of Sample Population - Results and Tables

Part I: Demographics

The majority of respondents to our survey are from nine Latin American countries (Table

1). Most respondents (60%) have some sort of legal status: 13% US citizens, 22% permanent

residents, and 25% TPS.1 Only 24% stated they are undocumented and 16% declined to answer.

Table 1. Country of Origin of Survey RespondentsCountry % of RespondentsEl Salvador 33Dominican Republic 17Guatemala 11Mexico 10Honduras 9Ghana 5Bolivia 5Peru 4Colombia 2Nicaragua 1Other 2

1 Temporary Protected Status

6

There were roughly two males per female in our sample set with ages ranging from 17 to

68 years old and averaging at 35. Those in their 20's made up the largest cohort (Table 2).

Table 2. Age of RespondentsAge Range % of respondents<20 221-30 4331-40 2541-50 2051-68 9

A little over half are single and, of those, 57% have no children, 14% have children in the

US, 18% have children in their home country and 8% have children in both countries. All in all,

59% of those with children (152) are married or cohabitating. Most of them have children living

in the US (52%), while 38% have children in their home country and 15% in both.

Just over 2/3 of respondents finished secondary school and 65% of those went on to

pursue, but not necessarily complete, a higher education.

14%

16%

46%

13%

11%Figure 1. Level of Education of Respondants

Completed University Some UniversityCompleted SecondaryCompleted Primary< Primary

A wide range of occupations are reperesented in our sample. Comparing respondents'

current occupation to their home country occupation, many more were students, business

owners, or worked in agriculture in their home country than in the US. On the flip side, many

moved into restaurant and other service jobs as well as construction and sales in the US (Table 3).

Table 3. Profession of RespondentsProfession % Current % In Home Country

7

Professional 10 15Self employed, Business owner 3 8Sales 9 7Agriculture 1 13Construction 22 10Teacher 3 4Unemployed 4 0Retired <1 2House wife 1 2Student 1 17Services (incl. Restaurants & Hospitality) 37 18Domestic worker 5 3Landscaping 3 <1

Of respondents who were willing to report their personal annual income, 72% earn less

than $25,000 and only 12% make over $35,000 (Table 4). To put that into the local context, the

average salary in the Washington DC area is $82,000.2

Table 4. Annual Personal IncomeThousands of USD % of Respondents<10 1710-15 1515-20 1720-25 1325-30 730-35 6>35 10No response 15

Although 75% of respondents have been in the US for up to 10 years, 43% have migrated

in the past five years. Looking at two-year bands up to 10 years shows a bulge in the >3-5 year

cohort that is nearly double those on either side of it (Table 5).3

Table 5. Years living in the US

2 http://www.indeed.com/salary3 The first band covers only one year, but the number of respondents in this cohort is roughly half that of the 2 year bands, so the trend is still valid.

8

# of Years % of Respondents1 7>1-3 15>3-5 21>5-7 16>7-10 16>10-15 9>15-20 6>20-25 625 4

Just over half of the respondents said they speak no or very little English, while only 14%

claimed fluency. The former tends to be overrepresented in the lower income brackets (Figure 2).

Likewise, a little over half said they never or seldom speak English at work, while only 14% said

they speak only English at work. Of the English-only cohort, a third of them (11) are in the top

income bracket and two of them (two teachers and one student) are in the lowest.

Part II. Remittances

Respondents to this survey tended to send an average of $270 each time they transferred

money to their country of origin. The average frequency of sending was 12 times per year (Table

6).

9

Table 6. Individual remittance amounts and frequency of sending.Remittance Amount USD % of Respondents 100 20101-200 38201-300 22301-500 14>500 8

Times sent per year % of Respondents6 207-12 6613-16 323-24 1025-52 1

The aggregate amount of money sent by all respondents in one year is $757,820,

averaging $3145 per remitter. The highest annual remittance among survey participants is $1800

and only 13 participants (8%) send less than $500 annually. Parents are by far the most frequent

principal recipients of remittances from this sample set (Table 7).

Table 7. Remittance RecipientsRelationship to sender %

Spouse 14Parent 44Child 12Sibling 10Grandparent 2Other relatives 8Friends 0Various 10

The average number of years these respondents have been sending remittances is eight,

with a median of five years (Figure 3). About 70% send their money via remittance agencies and

30% use banks even though 59% of respondents have a bank account. A negligible number send

money with travellers or use the internet for transfers even though 63% use the internet for other

purposes at least weekly.

10

9%

23%

24%14%

17%

7%4%3%

Figure 3. Years sending remmitances

£1>1-3>3-5>5-7>7-10>10-15>15-20>20-30

Part III. The Economic Crisis

Participants were asked to identify all the ways that the economic crisis has affected them

and the measures they have taken to cope. Roughly a third of respondents said they are working

fewer hours, fear losing their job, and are concerned about the future. Around 20% are self

employed and are finding little work, have lost their jobs, have relatives who have lost their jobs,

have spent their savings, cannot pay their rent, and are feeling panicked. Only 14% have not

been personally effected (Table 8).

Table 8. Effects of the Economic CrisisEffect % of RespondentsWork less hours 81Fear of losing job 81Fine now, but unsure about future 71Spent savings 52Feeling panicked 52Self employed: not much work 49Someone in my family has lost their job 48Lost job 44Can't pay rent 42So far I have not personally been affected 35

More than half said they have had to cut back on remmitances and about 45% have cut

back on phone calls and visits to their home country. In addition, a quarter of respondents

11

reported limiting purchases of home country goods. All in all, 72% reported reducing overall

spending. Other common coping measures include looking for a different or a scond job, moving

to a cheaper residence, and living off savings. In addition, almost a quarter of respondents have

sold possessions. Very few have refinanced their mortgage, have lost their home to a bank, or

have declared banckrupcy, but the significance of this is unknown because we do not know how

many respondants are homeowners. Respondents were split on whether they intend to return to

their home country, but most of those who do are planning to leave in 2012-2014. About 3/4 said

that family reunification is their motivation for returning and a little less than half said returning

has always been there intention. Just over 1/4 said that the quality of life is better in their home

country. Some 19% stated that there is no work in the US and 14% said there are better

opportunities in their country of origin.

A Review of the Literature: Bancarization and Immigration

This literature review will discuss how bancarization leads to development, world trends

of bancarization, characteristics of the unbanked/underbanked, reasons for not having a bank

account, and implications and policies for getting more people integrated into the formal

financial world. To better connect with the information gathered from our class quantitative

research project, we are interested in previous research on characteristics of immigrants in the

US and their bank status. Our analysis will find relations between our and previous research in

the immigrant characteristics of immigration status, age, and education.

The Center for Financial Services Innovation (CFSI) estimates that the United States has

21 million underbanked households out of a total of 42 million adults (2009). CFSI also

estimates that there are 9 million unbanked households (or 17 million adults) (CFSI, 2009).

12

Bancarization is important because it is a basic indicator for financial literacy and

development (Delgado, 2011; Lane & Milesi-Ferretti, 2007; Centro de Estudios Monetarios

Latinoamericanos, 2002; Frigeri,& Ferro, 2006; Clarke et al., 2001; Orozco). Banks provide

formal services that allow individuals to manage their finances and assets.

Benefits of Bancarization

There are micro and macro-level benefits of bancarization. At the micro-level,

bancarization increases management of assets, which in turn can amplify the individual or

society’s ability to collect wealth and improve education, health, real estate, and business

(Orozco). Bancarization helps the family develop its quality of life by giving it the ability to

accumulate assets which can be used to increase the family’s human, financial, and social capital

(Herrero et al., 2002).

At the macro level, bancarization is connected to a country’s financial development,

which, in turn, gives more access and options to the country’s citizens. Studies have shown

financial development is ideal when the state’s inflation is at 3% or less (Herrero et al., 2002).

Bancarization has been connected to the individual and country’s development because

integrating the unbanked into the banking system has a positive effect on the quality of life of a

region. World trends prove the link between bancarization and development. Herrero et al’s

research points to a worldwide correlation between GDP per capita income and financial depth is

66 percent (2002). Developing regions have pushed for professional financial access for all

citizens to improve their development. Asia is financially developing very well compared to

other regions (Herrero et al., 2002). Eastern Europe is also developing financially but slower

than Asia (Herrero et al., 2002). Latin America is behind Asia and Eastern Europe in terms of

13

financial development (Herrero et al., 2002). Latin America’s correlation between per capita

income and financial depth is 53 percent, thirteen percent behind the world trend Herrero et al.,

2002.

Characteristics of the Unbanked and Underbanked

According to the literature, the most common groups of the underbanked and unbanked

are less educated people, younger population, and immigrants (CFSI, 2009).

There is a positive relationship between between immigration status and bancarization.

Studies have proven that immigrants are a common group of the underbanked and unbanked

(Orozco; Herrero et al., 2002; CFSI, 2009). According to a CFSI study of 52,098 US citizens,

34.6 percent are underbanked. Among US citizens, minority citizens are considered to be more

likely to not have bank accounts (2009). The minority ethnicities are more likely to not have

bank accounts: 21.7% of African Americans, 19.3% of Hispanics, 15.6% of American Indians

are unbanked (CFSI, 2009). These numbers contrast are significantly low in contrast to the 3.3

percent of Whites and 3.5 percent of Asians who do not have bank accounts (CFSI, 2009). The

racial breakdown of underbanked citizen households are African-Americans, 31.6 percent;

American Indians, 28.9 percent; Hispanics, 24 percent; Whites, 14.9 percent; and Asians, 7.2

percent (CFSI, 2009).

In contrast to US citizens’ bancarization, immigrant numbers are significantly lower.

According to the CFSI, 47 percent (20.6 million) of all Latino consumers – US citizen or not --

in the US are underbanked or unbanked (2009). The CFSI study included a sample of 3,237

immigrants, in which 61.6 percent were underbanked -- compared to the 34.6 percent of US

citizens (2009). This group of immigrants was categorized into permanent and non-permanent

14

US residents (CFSI, 2009). Of permanent residents, 58.9% were unbanked, compared to 68.2%

percent of non-permanent residents who were underbanked (CFSI, 2009). The ten percent

difference between permanent and nonpermanent residents could imply that the extra

documentation of permanent residents facilitate financial access and/or permanent residents seem

to be more financially stable to manage a bank account and integrate themselves into formal

society financially.

Previous research has also found correlations between bancarization and age. The

younger one is the less likely one is to have a bank account (Endo et al., 2010; Kiene et al., 2011;

U.S. Department of the Treasury. 2009.) Endo et al’s research shows the difficulty of

bancarizing young Honduran men because they are less likely to be financial educated and do

not have enough assets to start bank accounts (2010).

While the research connecting bancarization to age is not definitive, some researchers do

suggest that the length of time one has spent in the host country has a positive effect on bank

account ownership. While the length of stay is not equivalent to age, the relationship suggests

that time is a factor for increasing bancarization. Immigrants who have been in the US longer

are less likely to be unbanked (CFSI, 2009). Length of stay has been associated with financial

literacy and English speaking skills, which purportedly directs one to better access to financial

services (CFSI, 2009). According to the CFSI study, 57.8 percent of those that immigrated

before 1991 were underbanked, 62.8 percent of immigrants that moved to the US between 1991

and 1999, and 63.1 percent that have immigrated between 2000 and 2004 (CFSI, 2009).

Education has also been found as a significant factor to bancarization. Previous research

has found that education and bancarization have a positive relationship (Lucas & Stark, 1985;

15

CFSI, 2009). The CFSI study has found that immigrants that have not completed high school are

75 percent likely to be underbanked, compared to immigrants that have completed high school,

61.9 percent, and immigrants that have accomplished at least some post-secondary education,

47.6 percent (2009).

Reasons and Solutions to Financial Exclusion

If the US is considered a financially developed country where financial access is

ubiquitous and bancarization is connected to micro and macro development, why are there so

many US citizens and immigrants in the US who are underbanked and unbanked? The two main

reasons for not having a bank account are not having enough money and the high costs of

account fees (U.S. Department of the Treasury, 2009; Endo et al., 2010). Together, these two

reasons make up 66 percent of the unbanked (U.S. Department of the Treasury, 2009). Other

reasons that impede bancarization is the sentiment of distrust and dislike of financial institutions,

the challenge of managing accounts, and the inability to open an account due to previous credit

problems or the lack of appropriate identification (U.S. Department of the Treasury, 2009).

As previously shown, absorbing the unbanked into a formal financial system is connected

to micro and macro development. Offering low-cost accounts, creating partnerships between the

traditional financial institutions and check cashing firms, opening accounts at a free federal

income tax preparation clinics, and providing free financial education are all efforts

recommended to integrate the unbanked into the banking system (U.S. Department of the

Treasury, 2009; Endo et al., 2010). Offering low-cost accounts will appeal to those who do not

have enough money to open an account and will help combat against the leading reason why

people do not have bank accounts. Creating partnerships between traditional financial

16

institutions and check casing firms will check if cashing services are good for low-income

individuals, serve as a vehicle for saving, and establish a positive relationship with mainstream

financial institutions (U.S. Department of the Treasury, 2009). Opening accounts at free federal

income tax preparation clinics will give an opportunity to identify those unbanked persons who

have enough savings to benefit from a formal financial institutions, like banks (U.S. Department

of the Treasury, 2009; Endo et al., 2010). Providing free financial education will be a way to

increase financial literacy and confidence in financial institutions among a populous. This free

financial education must give information about the costs and fees, inculcate individuals about

how to manage accounts, boost a sense of confidence in financial institutions, and encourage

efforts to save.

Discussion and Findings

Based on the literature review and our survey questions, this paper offers a topical

analysis that identifies the trends and patterns that exist between bancarization and four variables

—age, legal status, education, and length of stay in the United States. The following section

provides a descriptive summary of the data analysis between bancarization and these variables.

1. Age and Bank Account

Data on age is separated into four categories, ages 18-24, 25-44, 45-64, and 65, which is

based on the breakdown employed by the U.S. Census. As a result, two responses from 17 year

old respondents were dropped for the purposes of our data analysis. Two respondents also did

not disclose their age, and these two records were also dropped from this analysis. Six records

were miscoded for bank account status and dropped from this and all subsequent analyses.

Within these six records, one record was one that did not include an age. The data count in each

17

category is then converted into a percent of total for that category in order to cross-compare

across the age groups.

The analysis shows that survey respondents in the 18-24 age bracket are less likely to

have a bank account. 60% of respondent in this bracket do not have bank accounts. Respondents

who are in the age 25+ category are more likely to have bank accounts. Specifically, more than

50% have bank accounts, with 63% for respondents in the 25 - 44 age bracket and 53% in the 45

- 46 age bracket (Table 9). Figure 4 shows the general upward trend, indicating that respondents

are more likely to have bank accounts, with respondents in the 18-24 bracket least likely to have

bank accounts.

Table 9: Age and Bank Accounts

18-24 18-24 (% of total) 25-44 25-44 (%

of total) 45-64 45-64 (% of total) 65+ 65+ (% of

total) Total

No bank account 15 60% 57 35% 20 47% 1 33% 93Has bank account 10 40% 104 65% 23 53% 2 67% 139

Total 25 100% 161 100% 43 100% 3 100% 232

Figure 5

2. Legal Status and Bank Accounts

18

In the analysis, data on legal status is separated into three categories—undocumented,

legal, and no response. Legal includes American citizen, permanent resident, and work permits.

No response is given consideration in this analysis as 16% of the sample did not disclose their

legal status. The data count in each category is then converted into a percent of total for that

category in order to compare between the undocumented and legal groups. The analysis shows

that those who are undocumented are less likely to have bank accounts as 58% do not have bank

accounts. Those who have legal status are more likely to have bank accounts as 65% have bank

accounts (Table 10 and Figure 6).

Table 10: Legal Status and Bank Accounts

Undocu-mented

Undocu-mented (%

of total)Legal Legal (% of

total)No

Response

No Response

(% of total)Total

No Bank Account 33 58% 45 32% 17 44% 95Has Bank Account 24 42% 94 67% 22 56% 140Total 57 100% 139 100% 39 100% 235

Figure 6

3. Education and Bank Accounts

19

Hypothesizing that the completion of secondary school is a salient differentiating point

for the relationship between education and bank accounts, data on education is separated into

two categories—completed secondary school or above and completed none to primary school.

Completed secondary school includes respondents who have completed university, some

university, and secondary school. Completed none to primary school include respondents who

completed primary school or did not complete primary school. The data count in each category is

then converted into a percent of total for that category in order to compare between the two

groups. The analysis shows that those that have completed secondary school or above are more

likely to have bank accounts at 67%. Those that have completed none to primary school are less

likely to have bank accounts at 34% (Table 11 and Figure 7).

Table 11: Education and Bank Accounts

Completed Secondary or above

Completed Secondary

or above (% of total)

Completed none to Primary

Completed none to

Primary (% of total)

No Response Total

No bank account 57 33% 37 66% 1 95Has bank account 117 67% 19 34% 4 140

Total 174 100% 56 100% 5 235

Figure 7

20

4. Length of Stay and Bank Accounts

The data count in each category is converted into a percent of total for that category in

order to compare across the different groups based on the years in the U.S. The analysis shows a

general upward trend, indicating that respondents who have been here longer are more likely to

have bank accounts (Table 12 and Figure 8). The biggest difference between the banked and

unbanked is in the 15-20 years category, for which 79% has bank accounts.

Table 12: Length of Stay and Bank Accounts

Year >1-3 >3-5 >5-7 >7-10

>10-15

>15-20

>20-25

Total

Has Bank Accounts 7 19 31 20 24 13 11 8 7 140Has Bank Account (% of Total) 41% 56% 65% 53% 65% 62% 79% 53% 70%

No Bank Account 10 15 17 18 13 8 3 7 3 94No Bank Account (% of Total) 59% 44% 35% 47% 35% 38% 21% 47% 30%

Total 17 34 48 38 37 21 14 15 10 234

Figure 8

Analysis and Interpretation

From our bivariate analysis, we find that certain characteristics (age, length of stay in the

United States, having completed a high school education and having legal status) bear a strong

relationship with having a bank account. These findings confirm our hypothesis that there may

be a positive relationship with having a bank account and these four variables. Moreover, they

21

confirm what occurs the literature, which find that the most common groups of the underbanked

and unbanked are less educated people, younger population, and immigrants (CFSI, 2009). Our

finding that those over 25 years of age are more likely to have a bank account confirm the

broader finding in the literature that the likelihood of having a bank account increases with age

(Endo et al., 2010; Kiene et al., 2011; U.S. Department of the Treasury, 2009). Our finding

about length of stay in the United States being positively correlated with having a bank account

also confirms a study that found that immigrants who have been in the US longer are less likely

to be unbanked (CFSI, 2009). Our finding that having a high school education extends the

findings on bancarization and education as found by Lucas & Stark (1985) and CFSI (2009).

Last, our finding about the positive relationship between legal status and having a bank account

extends the literature on a hypothesis posed by a previous CFSI study. The 2009 CFSI surveyed

3,237 immigrants, in which 61.6 percent were underbanked -- compared to the 34.6 percent of

US citizens (2009). Of permanent residents, 58.9% were unbanked, compared to 68.2% percent

of non-permanent residents who were underbanked (CFSI, 2009).

What else needs to be done? If having a bank account is in fact associated with certain

inherent characteristics, what can be done to increase bank account ownership among the

unbanked that lack those characteristics? The literature shows that there have been a number of

interventions that tackle the reasons that people identify for being unbanked (U.S. Department of

the Treasury, 2009; Endo et al., 2010). However, there have been no studies to assess the

effectiveness of strategies that are believed to be effective (i.e. offering low-cost accounts,

creating partnerships with check cashing firms, opening accounts at a free federal income tax

preparation clinics, and providing free financial education) (U.S. Department of the Treasury,

2009). Therefore, the authors suggest that further research explore the impact of these programs

22

on increasing bancarization among groups that this study and the prevailing literature have found

are less likely to be banked.

Conclusion

This study confirms or extends previous findings about the saliency of certain

characteristics’ relationship with having a bank account. Through a bivariate analysis of survey

data migrant remitters in the Washington DC metropolitan area, we find that having the

following characteristics make one more likely to have a bank account: over 25 years of age,

have legal status, have been in the United States for at least one year and have achieved a high

school level of education. Conversely, younger, undocumented, recent arrivals and individuals

with no high school education are more likely to be unbanked. It will be beneficial for future

studies to test existing programs’ impact on bancarization.

References

Centro de Estudios Monetarios Latinoamericanos (2002), “Análisis de los efectos del incremento de la actividad de la banca extrajera en América Latina y el Caribe”. Monetaria. 25 (3).

CFSI. (2009). “A CFSI inBrief on the Underbanked Consumer Study: Characteristics of Latino Un- and Underbanked Consumers”. Received November 27, 2011. http://cfsinnovation.com/system/files/latinoinbrief_july09_inbrief.pdf

Clarke, G., Cull, R., Martinez P., S. & S. M. Sánchez (2001). “Foreign Bank Entry: Experience, Implications for Developing Countries, and Agenda for Further Research”. The World Bank Working Papers, Domestic Finance. Saving, Financial Systems, Stock Markets Series, No. 2698, The World Bank.

Delagado, M. (2011). “Latino Small Businesses and the American Dream: Community Social Work Practice & Economic and Social Development”. New York, NY. Columbia University Press.

Endo I., Hirsch, S., Rogge J., Borowik K. (2010). The U.S.-Honduras Remittance Corridor: Acting on Opportunities to Increase Financial Inclusion and Foster Development of a Transnational Economy. The World Bank. Washington, DC.

Frigeri, D. & Ferro A. (2006). “Financial Instruments for the Optimization of the Role of Remittances in

23

Development”. Centro Studi di Politica Internazionale. Received November 27, 2011. http://www.cespi.it/prog%20mida/pfrigenglish.pd bancarization and development

Herrero G., A., Santillán, J., Gallego, S., Cuadro, L. and C. Egea (2002). “Latin American Financial Development in Perspective”. Documento de Trabajo del Servicio de Estudios, No. 0216. Banco de España.

IMF (International Monetary Fund) (2009). International Transactions in Remittances: Guide for Compilers and Users. Washington, DC: IMF.

Kiene, B. Helin, D. W., Eckerdt B. (2011). “Cross-Border Banking: An Accenture Study of Cross-Border Mergers & Acquisitions in Banking”. Accenture. Received November 27, 2011. http://www.accenture.pl/SiteCollectionDocuments/PDF/Accenture-Cross-Border-Banking.pdf

Lane P. R.,  Milesi-Ferretti G. M. (2007). “The External Wealth of Nations Mark II: Revised and Extended Estimates of Foreign Assets and Liabilities, 1970–2004”. Journal of International Economics. 73 (2). 223-250.

Lucas R. and O. Stark (1985). Motivation to Remit: Evidence from Botswana. Journal of Political Economy, 93 (5).

Orozco, M. (Forthcoming). The Money in Between: Migrant Remittances and Development in the Global Economy.

U.S. Department of the Treasury (2009). “Findings from theFirst Accounts Program”. Executive Summary. Received November 27, 2011. http://www.treasury.gov/resource-center/financial-education/Documents/ExecutiveSummary_FirstAccounts_1-9-09.pdf

World Bank (2011). Migration and Remittances Fact Book 2011. Received December 12, 2011. http://siteresources.worldbank.org/INTLAC/Resources/Factbook2011-Ebook.pdf

Annexes

Annex 1: Interview Sites

No. LUGARES PRODUCTIVOS PARA ENTREVISTAS EN DC Y MD

1 Dupont Circle, New Hampshire Ave & Massachusetts Ave, NW, DC DC

2 Mt. Plesant St & Irving St, NW, DC DC

3 Iglesia Sagrado Corazón 16th St & Pine St, NW, DC DC

4 16th St & Irving St, NW, DC DC

5 16th St & Columbia Rd, NW, DC DC

24

6 Metro Station, 14th St & Irving St, NW, DC DC

7 13th St & Lamont St, NW, DC DC

8 Alante Financial, 3110 Mount Pleasant St, NW, DC DC

9 FIDMi Mi Tierra, 1736 Columbia Rd, NW, DC DC

10 Consulado El Salvador, 2332 Wisconsin Ave, NW, DC DC

11 Home Depot, 901 Rhode Island Ave, NE, DC DC

12 EW Hwy & Riggs Rd, Tacoma Park, MD MD

13 Riggs Rd & Merrimac Dr, Langley Park, MD MD

14 EW Hwy & Colesville Rd, Silver Spring, MD MD

15 Chirilagua or Arlandria: West Glebe Rd & Mount Vernon Ave VA

16 Chirilagua neighborhood Community Center: 3801 Mt. Vernon Avenue. VA

17 Columbia Pike & S Glebe Rd VA

18 Lee Hwy & N Glebe Rd VA

19 Clarendon Market Commons: Clarendon Blvd., Arlington VA

20 N. Pierce St. & Clarendon Bouleverd VA

25