Dynamics of Income and Voluntary Financial Self-Exclusion

In this paper, we aim to determine whether low-income Americans and financial exclusion are integrated—and to what extent—in the mainstream financial system. We estimate the parameter of logistic regression specifications of individual financial access. Our results show that income levels and the intensity of using mainstream banking services are the primary drivers of financial exclusion. When low-income levels intersect with socioeconomic characteristics, such as generational cohort, gender, educational levels, and race or ethnicity, financial exclusion is significantly affected. Our findings suggest that voluntary self-exclusion is driven by households’ socioeconomic status, particularly their perceived difficulties in accessing the mainstream financial service industry. In this study of income-level exclusion, we address the literature gap by considering self-exclusion from the financial service industry.