The Society for Social Work and Research

2014 Annual Conference

January 15-19, 2014 I Grand Hyatt San Antonio I San Antonio, TX

Latinos and Banking in the United States: The Effect of Latino Heterogeneity, Country of Origin, and Acculturation On Bank Account Ownership

Saturday, January 18, 2014: 8:30 AM
Marriott Riverwalk, Alamo Ballroom Salon F, 2nd Floor Elevator Level BR (San Antonio, TX)
* noted as presenting author
Anthony Molieri, MSW, Masters Student, Washington University in Saint Louis, Saint Louis, MO
Purpose: Twenty percent of Latinos in the U.S. do not own bank accounts. People who do not own bank accounts have more difficulty saving money and building credit. They are also more likely to use alternative financial services (AFS) (payday lenders, check cashers, etc.), incurring large fees. For people in poverty the inability to save, as well as the fees that they pay to AFS can make it more difficult for them to make it out of poverty. To date little research has been done that looks at this relationship, especially in the context of Latino cultural heterogeneity. This study used the capability approach from Amartya Sen, as well as ideas put forth by researchers such as Douglas Massey and others who have studied the varying outcomes for immigrant populations based on their different points of origin, to answer the question: Amongst Latinos does acculturation and country of origin affect banking status?
Methods: Data from the Current Population Survey’s January 2009 survey, along with a supplemental questionnaire on bank use were used. In order to understand differences between countries based on their country of origin, Latin American countries were organized based on their Human Development Index (HDI) scores. Groups were created for the U.S., Mexico, countries with moderate-HDI scores, and countries with low-HDI scores. Univariate, bivariate, and logistic regression analysis were conducted to determine the relationship between owning a bank account, the development level of different Latin American countries, key acculturation variables (U.S. citizenship, and speaking Spanish at home), and relevant control variables.
Results: The overall model was statistically significant (χ2 (20) = 1415.07, p<.001) with citizenship status predicting 77% greater odds of owning a bank account, and speaking only Spanish at home predicting 53% lower odds of owning a bank account. Interestingly, Latinos from moderately developed countries had 85% greater odds of owning a bank account, compared to Latinos born in the U.S. Further analysis documented that people from moderate-HDI countries were different from all other groups in certain control variables.
Implications: Results of the acculturation variables were consistent with the capability approach with regard to the positive effect that acculturation can have on bank use. On its face, the 85% greater odds of owning a bank account for Latinos from moderate-HDI countries would seem to disagree with the capability approach, however it may point to the isolation that some U.S. born Latinos face. The reason for why U.S. Latinos have such poor outcomes is unclear and merits further research. Differences amongst the HDI groups supports the argument put forth by Massey and others, that Latinos are not homogeneous, and that current survey methodology fails to gather sufficient data to explain these differences. Conclusions advocate for increased research, and better sampling methodology, by researches who are interested in outcomes for Latino subgroups. The findings also have implications for financial educators interested in helping increase financial literacy and access for Latinos, with recommendations that encourage culturally competent outreach strategies.