Center on Assets, Education, and Inclusion

  1. Can Post Offices Increase Access to Financial Services?

    Postal banking through the US Postal Service has been recommended as one option for improving the availability of safe and affordable financial products and services in lower-income and minority communities. Advocates of postal banking suggest that post offices have maintained their presence in communities vacated by banks and credit unions and inundated by alternative financial service (AFS) providers. However, there have been few attempts to analyze data in order to test this assumption. Using financial services and community demographic data for 31,489 zip codes across the US, we compared the concentrations or densities of bank and credit union branches, AFS, and post offices.

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    Citation

    Despard, M., Friedline, T., & Refior, K. (2017). Can post offices increase access to financial services? A geographic investigation of financial services availability. Lawrence, KS: University of Kansas, Center on Assets, Education, & Inclusion (AEDI).

    Authors

    Despard, Mathieu R., Friedline, Terri, Refior, Kevin

    Financial Inclusion Report Year 2017

  2. Do Metropolitan Areas have Equal Access to Banking?

    Metropolitan areas are places where the majority of residents in the US live and work. Each of these areas has unique features regarding education, employment, public transit options, arts, recreation, and worship opportunities. Each metropolitan area also has a unique financial services landscape – a mix of both mainstream and alternative financial services, which may offer households different types of products and services to help manage resources and make ends meet.

    While prior research has examined the geo-spatial distribution of mainstream and alternative financial services within particular cities and metropolitan areas, little is known about how the availability of these services varies across metropolitan areas for the entire country. For instance, what is the availability of financial services in the Kansas City area, where the “snowbelt” city’s poverty rate is slightly higher than the national average, 30% of residents are Black, the population is growing, and the Federal Reserve and FDIC both have branches? And, how does the availability of Kansas City area’s financial services compare to that of the Detroit area, where the “rustbelt” city’s poverty rate is nearly three times the national average, 83% of residents are Black, the population is shrinking, and major manufacturing companies are closing? Or the Riverside, CA area, a “sunbelt” city located in the San Joaquin Valley with an agriculture-based economy, a poverty rate that is higher than the national average, and a Latino population of 48%? Variation in this availability may indicate that households living in different communities have greater or lesser access to financial services to promote financial stability.

    Using financial services and community demographic data for 356 metropolitan statistical areas (MSAs) across the US, we compared the concentrations or densities of bank and credit union branches and alternative financial services.

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    Citation

    Despard, M., & Friedline, T. (2017). Do metropolitan areas have equal access to banking? A geographic investigation of financial services availability. Lawrence, KS: University of Kansas, Center on Assets, Education, & Inclusion (AEDI).

    Authors

    Despard, Mathieu R., Friedline, Terri

    Financial Inclusion Report Year 2017

  3. Investing in the Future

    Households need access to financial services that enhance their long-term financial health by providing opportunities to accumulate assets and build credit. Under this purview, banks and credit unions can be used for future investment, and alternative financial service (AFS) providers have been heavily critiqued for their role in undermining households’ long-term financial health. The types of financial services available within the community may be associated with financial health, improving or impeding a household’s ability to invest in the future, maintain a manageable level of debt, and achieve long-term goals.

    This study used data on financial services, individual/household and community demographics (including smartphone use), and household financial health to test whether the geographic concentrations or densities of bank and credit union branches and AFS providers within communities were associated with households’ financial health. We used two measures of financial services: the numbers of financial services per 1,000 population, or densities, and the composition of financial services densities relative to one another. We explored these associations by income as the availability of financial services within communities varies based on household income levels.

    The findings from this study are not intended to be used for drawing clear prescriptions about building brick-and-mortar branches in communities. Instead, these findings offer preliminary understandings of whether the availability of financial services in communities relates to households’ financial health, for which households, and under what conditions.

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    Citation

    Friedline, T., Despard, M., & West, S. (2017). Investing in the future: A geographic investigation of brick-and-mortar financial services and households’ financial health. Lawrence, KS: University of Kansas, Center on Assets, Education, & Inclusion (AEDI).

    Authors

    Friedline, Terri, Despard, Mathieu R., West, Stacia

    Financial Inclusion Report Year 2017

  4. Mapping Financial Opportunity

    The Mapping Financial Opportunity (#MapFinOpp) project was designed to investigate financial inclusion and health from a system perspective. In particular, the project aimed to understand variations in communities’ financial services, whether variations were based on communities’ racial and economic compositions, and whether these variations within communities were associated with households’ financial health. In addition, because the safety and affordability of financial products and services also matter, Mapping Financial Opportunity conducted surveys with random samples of banks, credit unions, and payday lenders to gain an understanding of how much consumers could expect to pay for entry-level products from the financial services within their communities. That is, just because a person has a bank in their community does not mean they can afford the minimum opening deposit or monthly maintenance fees. Thus, the project had four primary components, each relying on slightly different data: 

    • Interactive, web-based platform1;
    • Community analyses;
    • Household analyses; and
    • Product surveys.

    This report provides a summary of the project’s main findings in each of these four components, as well as key dissemination activities and plans for next steps.

     

    1Please visit the website here: https://www.newamerica.org/in-depth/mapping-financial-opportunity/

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    Citation

    Friedline, T., & Despard, M. (2017). Mapping financial opportunity: Final report. Ann Arbor, MI: University of Michigan, Center on Assets, Education, & Inclusion (AEDI).

    Authors

    Terri Friedline, Mathieu Despard

    Financial Inclusion Report Year 2017

  5. Navigating Day-to-Day Finances

    A household with good financial health owns basic financial products and uses these products to navigate their day-to-day financial needs, such as managing and paying their bills. However, one potential pitfall that households may face as they try to navigate their finances is that certain types of financial services may not be readily available in the communities where they live. For example, the availability of banks, credit unions, or alternative financial service (AFS) providers in a household’s community may be limited. Hence, a household may be drawn to certain types of financial services that may improve or impede their ability to sustain good financial health, depending on the services that are most geographically convenient.

    This study used data on financial services, individual/household and community demographics (including smartphone use), and household financial health to test whether the geographic concentrations or densities of bank and credit union branches and AFS providers within communities were associated with households’ financial health. We used two measures of financial services: the numbers of financial services per 1,000 population, or densities, and the composition of financial services densities relative to one another. We explored these associations by income as the availability of financial services within communities varies based on household income levels.

    The findings from this study are not intended to be used for drawing clear prescriptions about building brick-and-mortar branches in communities. Instead, these findings offer preliminary understandings of whether the availability of financial services in communities relates to households’ financial health, for which households, and under what conditions.

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    Citation

    Friedline, T., Despard, M., & West, S. (2017). Navigating day-to-day finances: A geographic investigation of brick-and-mortar financial services and households’ financial health. Lawrence, KS: University of Kansas, Center on Assets, Education, & Inclusion (AEDI).

    Authors

    Friedline, Terri, Despard, Mathieu R., West, Stacia

    Financial Inclusion Report Year 2017

  6. Resilient in the Midst of Financial Change

    A household’s ability to adjust to changing financial circumstances provides evidence of good financial health and demonstrates their resilience in the face of unexpected financial emergencies. To reinforce their resilience, households may use savings, credit, and insurance from financial services such as banks, credit unions, and alternative financial service (AFS) providers. The types of financial services available within the community may be associated with resilience, improving or impeding a household’s ability to save for emergencies or access credit.

    This study used data on financial services, individual/household and community demographics (including smartphone use), and household financial health to test whether the geographic concentrations or densities of bank and credit union branches and AFS providers within communities were associated with households’ financial health. We explored these associations by income given that households may be exposed to varying densities of financial services within communities based on their income levels.

    The findings from this study are not intended to be used for drawing clear prescriptions about building brick-and-mortar branches in communities. Instead, these findings offer preliminary understandings of whether the availability of financial services in communities relates to households’ financial health, for which households, and under what conditions.

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    Citation

    Friedline, T., Despard, M., & West, S. (2017). Resilient in the midst of financial change: A geographic investigation of brick-and-mortar financial services and households’ financial health. Lawrence, KS: University of Kansas, Center on Assets, Education, & Inclusion (AEDI).

    Authors

    Friedline, Terri, Despard, Mathieu R., West, Stacia

    Financial Inclusion Report Year 2017

  7. Building Bridges, Removing Barriers

    Consider the following scenarios of three households that must use their varying resources to afford daily expenses and make ends meet: The Washington household's financial health is secure. When payday arrives, they use the money from their paycheck to pay bills and buy groceries. Fortunately for the Washingtons, they have direct deposit with a local bank, so the money from their paycheck is available for immediate use. Even though their bank is located just a mile away, direct deposit saves them from making an extra errand to cash their paycheck. Their account even has automatic bill pay so that their regular payments toward utility bills and auto insurance can be deducted in an easy and timely fashion. Since establishing automatic bill pay, they have never had to remember when these bills come due. They write a check to pay the rent and use their debit card to buy groceries at the store. There’s usually enough money in their account to afford the necessary day-to-day expenses; however, a bank-issued credit card can be used when money is short. When their car broke down a few months ago, the Washingtons took out a small, low-interest loan from their bank. Taking out the loan was easy since they had good credit and a longstanding relationship with their bank. With their current paycheck, they are able to make the final loan payment and save the extra money in their savings account. The Washingtons have been able to save $100 dollars each month for the last year, steadily advancing their financial health by accumulating savings in case the car ever needs another repair and investing in their future.

    Citation

    Friedline, T. (2016). Building bridges, removing barriers: The unacceptable state of households' financial health and how financial inclusion can help. Lawrence, KS: University of Kansas, Center on Assets, Education, and Inclusion.

    Authors

    Friedline, Terri

    Financial Inclusion Report Year 2016

  8. Building Bridges, Removing Barriers - Executive Summary

    A majority of US households are struggling financially and are barely able to keep up with their day-to-day expenses let alone invest in their futures. Many struggle to pay their bills and utilities, they forego preventive medical treatment, they do not have savings to deal with financial emergencies, and they are increasingly relying on debt to make ends meet. Moreover, too many households do not have access to the basic bank or savings accounts that they so desperately need to manage their financial lives. Building Bridges, Removing Barriers proposes that financial inclusion—access to basic bank or savings accounts—can operate as a “bridge” to households’ financial health. A bridge is an infrastructural solution that offers safe passage over rough terrain and a connection to new opportunities. For households stranded on islands of financial struggles, a bridge may be a welcomed passageway to secure ground. Households may be able to afford their day-to-day expenses like rent and utility bills and save for financial emergences like an unexpected job loss or major car or home repair. Once on secure ground, households can advance on their journey more easily. They have enough money saved to recover from financial emergencies, keep their debt at manageable levels, and begin to invest in the future by saving for retirement. From this perspective, financial inclusion by having access to basic bank or savings accounts can have the dual effects of stabilizing or securing households’ financial health and advancing or mobilizing it.

    Citation

    Friedline, T. (2016). Building bridges, removing barriers: The unacceptable state of households' financial health and how financial inclusion can help. Lawrence, KS: University of Kansas, Center on Assets, Education, and Inclusion.

    Authors

    Friedline, Terri

    Financial Inclusion Executive Summary Year 2016

  9. A developmental perspective on children's economic agency

    Understanding children’s development is critical in the midst of efforts that teach children about money and open savings accounts for them early in life. These efforts are delivered at a time of extensive developmental change, yet with limited attention to this context. Through a review of research, this study unveils the ages at which children may be able to save and to use savings accounts—specific aspects of economic knowledge and behavior—based on cognitive, social, and linguistic development. Children are developmentally capable of saving by age five or six. Children’s developmental gains at this age may prepare them for the gains they make in economic knowledge and behavior. Implications are discussed with regard to policy efforts like Child Development Accounts (CDAs) that open savings accounts for young children and encourage saving behaviors. CDAs should take development into consideration if children are to use their accounts for their benefit.

    Citation

    Friedline, T. (2015). A developmental perspective on children's economic agency. Journal of Consumer Affairs [Special Issue: Starting Early for Financial Success: Capability into Action]).

    Authors

    Friedline, Terri

    Financial Inclusion Journal Article Year 2015

  10. Building Millenials' Financial Health Via Financial Capability

    Today's young adults, referred to as Millennials born between the early 1980's and 2000's, are coming of age in an economy unlike any other. The macroeconomic conditions of the Great Recession from approximately 2007 to 2011 systematically undermined Millennials’ financial health by limiting employment opportunities, stagnating income growth, reducing net worth, and increasing reliance on debt. Millennials entered a labor market with limited opportunities and saw higher unemployment rates than the rest of the population. Fewer Millennials entered the labor market than young adults from any preceding generation and their unemployment rate was roughly 15 to 17 percent at the height of the recession—5 to 7 percentage points higher than the average unemployment rate for the rest of the population. They also experienced diminishing returns for participating in the labor market, earning 6 percent less per paycheck than in previous years.

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    Authors

    Friedline, Terri

    Financial Inclusion Report Year 2015

  11. Building Millennials' Financial Health

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    Citation

    Friedline, T., & West, S. (2015). Building Millennials' financial health via financial capability. Lawrence, KS: University of Kansas, Center on Assets, Education, and Inclusion (AEDI).

    Authors

    Friedline, Terri, West, Stacia

    Financial Inclusion Infographic Year 2015

  12. Coming of Age on a Shoestring Budget: Financial Capability for Lower-Income Millennials

    This study, generously funded by the FINRA Investor Education Foundation, examined the financial health and capability of lower-income Millennial young adults between the ages of 18 and 34 (annual incomes < $25,000; N = 2,578) from the 2012 National Financial Capability Study (NFCS). In particular, this study explored how varying combinations of financial education and financial inclusion related to Millennials' financial behaviors, like saving for emergencies, using alternative financial service providers, and carrying debt. The 2012 NFCS is one of the few data sets with extensive questions about financial behaviors. The results identifying significant differences in the data were based on multiply imputed and propensity score weighted (average treatment effect for the treated; ATT) regression analyses of young adults in the sample.

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    Citation

    West, S., & Friedline, T. (2015). Coming of age on a shoestring budget: Financial capability for lower-income Millennials (AEDI Research Brief). Lawrence, KS: University of Kansas, Center for Assets, Education, and Inclusion.

    Authors

    West, Stacia, Friedline, Terri

    Financial Inclusion Brief Year 2015

  13. Do Community Characteristics Relate to Young Adult College Students’ Credit Card Debt?

    This study examines the extent of emergent, outstanding credit card debt among young adult college students and investigates whether any associations exist between the characteristics of the communities in which these students grew up or lived and their credit card debt. Using data (N = 748) from a longitudinal survey and merging community-level characteristics measured at the zip code level, we confirmed that a community’s unemployment rate, average total debt, average credit score, and number of bank branch offices were associated with a young adult college student’s acquisition and accumulation of credit card debt. Community-level characteristics had the strongest associations with credit card debt even after controlling for individual characteristics such as a young adult college student’s race, GPA, and financial independence and familial characteristics such as their parents’ income and whether their parents discussed financial matters like establishing credit. The findings from this research may help to understand how communities can be better capacitated to support the financial goals of their residents.

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    Citation

    Friedline, T., West, S., Rosell, N., Serido, J., & Shim, S. (2015). Do community characteristics relate to young adult college students’ credit card debt (AEDI Research Brief)? Lawrence, KS: University of Kansas, Center on Assets, Education, and Inclusion.

    Authors

    Friedline, Terri, West, Stacia, Rosell, Nehemiah, Serido, Joyce, Shim, Soyeon

    Financial Inclusion Brief Year 2015

  14. Do Community Characteristics Relate to Young Adult College Students’ Credit Card Debt?

    Credit cards are a fundamental component of households’ financial portfolios in the United States; however, overreliance on credit may contribute to financial setbacks. The potential for financial setbacks is particularly concerning among the current young adult generation that is accumulating higher amounts of credit card debt than preceding generations. These trends have led many researchers and policymakers to argue that financial education should become a fundamental component of public school curricula, assuming that financially educated young adults would make better, healthier decisions about credit. However, young adults’ credit card debt may be more than an individual phenomenon. A young adult’s street address—the community in which they grow up or live—can be a key factor in determining how they use credit. This study uses restricted-access, zip code data from a longitudinal sample of 748 young adult college students to examine whether the characteristics of the communities in which they grew up or lived prior to attending college relates to their outstanding credit card debt. A community’s characteristics, such as its unemployment rate and concentration of mainstream banks, have the strongest associations with a young adults’ credit card debt even after taking into consideration their financial education or whether their parents taught them about money as they were growing up. Findings help to understand how communities can be better capacitated to support young adults’ financial health.

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    Citation

    Friedline, T., West, S., Rosell, N., Serido, J., & Shim, S. (2015). Do community characteristics relate to young adult college students' credit card debt? The hypothesized role of collective institutional efficacy. Lawrence, KS: University of Kansas, Center on Assets, Education, and Inclusion.

    Authors

    Friedline, Terri, West, Stacia, Rosell, Nehemiah, Serido, Joyce, Shim, Soyeon

    Financial Inclusion Working Paper Year 2015

  15. Does Community Access to Alternate Financial Services Relate to Individual's Use of Service

    There is concern that the increasing accessibility of alternative financial services in communities across the US is risking individuals' financial health by increasing their use of these high-cost services, potentially trapping them into carrying burdensome debt, damaging their credit scores, or delaying payments on rent or utilities. This study uses restricted-access, zip code data from a nationally representative sample of nearly 24,000 adult individuals to examine whether the concentration of alternative financial services within communities relates to individuals’ use of these services. Generally, the assumption holds that increased access is associated with increased use; however, there are differences in how individuals use alternative financial services based on their annual household income. Modest and highest income individuals are more likely to use these services when they live in communities with higher concentrations of alternative financial services. For lowest income individuals, higher concentrations are associated with their more frequent or chronic use of these services. Local, state, and national policies are needed to provide safe and affordable financial services within communities and to regulate the expanding alternative financial services industry.

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    Citation

    Friedline, T., & Kepple, N. (2016). Does community access to alternative financial services relate to individuals' use of these services (AEDI Research Brief)? Lawrence, KS: University of Kansas, Center on Assets, Education, and Inclusion.

    Authors

    Friedline, Terri, Kepple, Nancy

    Financial Inclusion Brief Year 2015

  16. Does Community Access to Alternate Financial Services Relate to Individual's Use of Service

    There is concern that the increasing number of alternative financial services in communities across the US is risking individuals' financial health by increasing their use of these highcost services. To address this concern, this study used restricted-access, zip code data from nationally representative samples of adult individuals and examined whether the density or concentration of alternative financial services within communities related to individuals’ use of these services. The associations between community density and individuals' use varied by annual household income: Communities' higher density of alternative financial services was associated with the increased probability that modest and highest income individuals ever used these services, while higher density was associated with more chronic use among lowest income individuals. State regulation that prohibited payday lenders was protective for modest and highest income individuals, but had no effect for lowest income individuals. Policy implications are discussed.

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    Citation

    Friedline, T., & Kepple, N. (2016). Does community access to alternative financial services relate to individuals’ use of these services? Beyond individual explanations. Lawrence, KS: University of Kansas, Center on Assets, Education, and Inclusion

    Authors

    Friedline, Terri, Kepple, Nancy

    Financial Inclusion Working Paper Year 2015

  17. Financial Education is Not Enough: Millenials May Need Financial Capability for Healthy Financial Behaviors

    Financial education sans opportunities for hands-on experience and knowledge operationalization may be insufficient for promoting healthy financial behaviors. Financial capability combines financial education with financial inclusion via a savings account, thereby giving an opportunity translate knowledge into practice. This study used data from the 2012 National Financial Capability Study to examine relationships between financial capability and financial behaviors of United States Millennials (N = 6,865). Compared to their financially excluded peers, Millennials who were financially capable were 176% more likely to afford unexpected expenses, 224% more likely to save for emergencies, 21% less likely to use alternative financial services, and 30% less likely to carry burdensome debt. Interventions that focus solely on financial education or inclusion may be insufficient for facilitating Millennials’ healthy financial behaviors; interventions should instead develop financial capability.

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    Authors

    Friedline, Terri, West, Stacia

    Financial Inclusion Working Paper Year 2015

  18. Financial Education is Not Enough: Millennials May Need Financial Capability

    This study, generously funded by the FINRA Investor Education Foundation, examined the financial health and capability of Millennial young adults between the ages of 18 and 34 (N = 6,865) from the 2012 National Financial Capability Study (NFCS). In particular, this study explored how varying combinations of financial education and financial inclusion related to Millennials' financial behaviors, like saving for emergencies, using alter-native financial service providers, and carrying debt. The 2012 NFCS is one of the few data sets with extensive questions about financial behaviors. The results identifying significant differences in the data were based on multiply imputed and propensity score weighted (average treatment effect for the treated; ATT) regression analyses of young adults in the sample

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    Citation

    Friedline, T., & West, S. (2015). Financial education is not enough (AEDI Research Brief). Lawrence, KS: University of Kansas, Center for Assets, Education, and Inclusion.

    Authors

    Friedline, Terri, West, Stacia

    Financial Inclusion Brief Year 2015

  19. Financial Inclusion as Part of a New, 22nd Century American Social Contract

    The dismantling of the American social contract is jeopardizing the economic security and mobility of today's young people and that of future generations. The labor market no longer delivers on its promises of adequate compensation. Higher education, itself pruning opportunity by expecting young people to borrow heavily for its privilege, now has outsized importance for realizing the labor market’s potential. Young people are increasingly born into opportunity that determines whether and how they can take advantage of these institutions and the opportunities they offer. This paper makes a case for financial inclusion as part of a new American social contract. Like owning stock in a company, financial inclusion may be one way of giving young people a stake within these institutions and affirming these institutions' commitments to their roles in the social contract. Children's Savings Accounts (CSAs) are presented as a way of beginning to deliver financial inclusion and create and shore up a new American social contract—one that can sustain future generations and the United States economy into the 22nd century.

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    Authors

    Friedline, Terri

    Financial Inclusion Working Paper Year 2015

  20. Preventive policy strategy for banking the unbanked: Savings accounts for teenagers

    Citation

    Friedline, T., Despard, M., & Chowa, G. (2015). Preventive policy strategy for banking the unbanked: Savings accounts for teenagers? Journal of Poverty.

    Authors

    Friedline, Terri, Despard, Mathieu R., Chowa, Gina A.N.

    Financial Inclusion Journal Article Year 2015

  21. Savings Account: Protection from Unsercured Debt

    Debt is an important component of young Americans’ balance sheets, in part because the effects of different types of debt can vary widely: while some types of debt can contribute to lifetime economic mobility, other types can drain resources. This paper used data from the 1996 Survey of Income and Program Participation to consider the role that a savings account might play in the use of secured and unsecured debt by young adult households. While a savings account was related to more accumulated debt overall, the type of debt accumulated was less risky and potentially more productive. Owning a savings account was associated with a 15% increase, or $7,500, in the value of secured debt and a 14% decrease, or $581, in the value of unsecured debt. Thus, a savings account may help young adults “invest in their debt” by entering better, healthier credit markets and protecting them from riskier ones.

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    Authors

    Friedline, Terri, Freeman, Allison T

    Financial Inclusion Working Paper Year 2015

  22. The Landscape of Millennials' Financial Capability

    This study, generously funded by the FINRA Investor Education Foundation, examined the financial health and capability of Millennial young adults between the ages of 18 and 34 (N = 6,865) from the 2012 National Financial Capability Study (NFCS). In particular, this study explored how varying combinations of financial education and financial inclusion related to Millennials' financial behaviors, like saving for emergencies, using alternative financial service providers, and carrying debt. The 2012 NFCS is one of the few data sets with extensive questions about financial behaviors. The results identifying significant differences in the data were based on multiply imputed and propensity score weighted (average treatment effect for the treated; ATT) regression analyses of young adults in the sample.

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    Citation

    Friedline, T., & West, S. (2015). The landscape of Millennials’ financial capability (AEDI Research Brief). Lawrence, KS: University of Kan-sas, Center for Assets, Education, and Inclusion.

    Authors

    Friedline, Terri, West, Stacia

    Financial Inclusion Brief Year 2015

  23. The Potential for Savings Accounts to Protect Young Adult Households from Unsecured Debt

    The effects of different types of debt can vary widely: some debt is considered productive by advancing young adult households' financial health while other debt can be unproductive, pushing their financial health out of reach. A savings account may help young adult households reduce their reliance on unproductive debt and increase their access to productive debt that can facilitate wealth building and economic mobility. This study tests the association between a savings account and debt in the lives American young adults during periods of macroeconomic stability and decline. Owning a savings account in 1996 is associated with a 14% decrease ($844) in young adult households’ accumulated unsecured debt, while closing an account in 2008 is associated with a 12% increase ($1,320) in this type of debt. Overall, a savings account may help young adults “invest in their debt” by entering better, healthier credit markets and protecting them from riskier ones—especially during bad economic times. Policy interventions are needed that increase access to savings accounts and help young adult households to use debt productively.

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    Citation

    Friedline, T., & Freeman, A. (2015). The potential for savings accounts to protect young adult households from unsecured debt in periods of macroeconomic stability and decline (AEDI Research Brief). Lawrence, KS: University of Kansas, Center on Assets, Education, and Inclusion.

    Authors

    Friedline, Terri, Freeman, Allison T

    Financial Inclusion Brief Year 2015

  24. Young Adult's Race, Wealth, and Entrepreneurship

    The current young adult generation is expected to lead a resurgence in entrepreneurial activities in the United States and these activities are expected to drive economic growth in the coming years. However, young adults may find it difficult to fulfill the expectations of becoming entrepreneurs and drivers of economic growth. This is because entrepreneurial opportunities are typically reserved for the wealthiest and most privileged Americans who have the financial resources needed to invest in starting small businesses, such as savings and access to credit. In contrast, young adults have not had much time to save money, build credit, or accumulate wealth. Moreover, given historic wealth inequalities rooted in racism and discrimination, young adults from racial and ethnic minority groups may be left out of the entrepreneurial resurgence and its economic benefits. This study analyzes nationally representative, longitudinal data to addresses the questions of whether young adults' wealth can support their entrepreneurial activities by becoming self-employed and whether black and Latino/a young adults leverage their wealth differently to support their entrepreneurial activities. Generally, the probability of being selfemployed;increases for all young adults as they accumulate wealth. However, wealth may play an outsized role in the self-employment of black and Latino/a young adults. Black and Latino/a young adults may not be able to rely on taking out a small loan at a bank or credit union in order to open their business; instead, they may be forced to use their own limited wealth for pursuing entrepreneurship. Policies are needed that support wealth accumulation (particularly for racial and ethnic minorities), remove discriminatory lending practices, and provide young entrepreneurs with access to credit.

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    Citation

    Friedline, T., & West, S. (2015). Young adults' race, wealth, and entrepreneurship (AEDI Research Brief). Lawrence, KS: University of Kansas, Center on Assets, Education, and Inclusion.

    Authors

    Friedline, Terri, West, Stacia

    Financial Inclusion Brief Year 2015

  25. Young Adults' Race, Wealth, and Enterpreneurship

    This study explored relationships among young adults’ wealth and entrepreneurial activities with emphasis on how these relationships differ among racial and ethnic groups. Using data (N = 8,984) from the 1997 National Longitudinal Survey of Youth, results indicate that being Black or Latino/a, as well as liquid asset holdings and net worth, were significantly related to the likelihood of self-employment. In analyses disaggregated by race or ethnicity, greater liquid asset holdings were associated with the decreased likelihood of self-employment among white young adults. Black young adults’ greater debt and net worth were associated with increased likelihoods of entrepreneurial activity. Among Latino/a young adults, greater liquid asset holdings and net worth were associated with increased likelihoods of self-employment. Wealth may play an outsized role in the self-employment of black and Latino/a young adults compared to that of their white counterparts. Racial and ethnic minority young adults may have a heavier burden for generating their own capital to embark on entrepreneurial activities when mainstream credit markets are unresponsive or inaccessible. Policy implications are discussed.

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    Citation

    Friedline, T., & West, S. (2015). Young adults' race, wealth, and entrepreneurship. Lawrence, KS: University of Kansas, Center on Assets, Education, and Inclusion.

    Authors

    Friedline, Terri, West, Stacia

    Financial Inclusion Working Paper Year 2015