Immigration and Underbanking: An Analysis of the Financial Integration of Immigrant Populations

Underbanking, or use of alternative financial services such as payday lenders rather than traditional banks, is a practice that has substantial financial and social harm. Given that literature and prior research shows that immigrants face unique cultural barriers to financial assimilation, the current study examines how immigrant status influences one’s odds of being underbanked. Using the June 2015 Underbanking Supplement to the Current Population Survey, immigrants are delineated by first- and second-generation status, as well by the development status of their country of origin, and their relationship to underbanking is examined through a series of logistic regression analyses. Results indicate that first-generation immigrants from developing countries continue to face substantial barriers to full financial assimilation, while those from developed countries share similar outcomes as citizens. Second-generation immigrants whose parents are from developing countries, however, have lower odds to be underbanked, showing that generational progress is occurring. Implications of this analyses are that future research should not assume immigrants all share one monolithic experience in the context of economic integration