The high price of economic marginalization: Low-income Latinas’ experiences with mainstream banking and alternative financial services.

Abstract

Economic exclusion takes many forms including lack of access to financial services. Rates of being underbanked or unbanked are higher in low-income communities and communities of color than affluent, predominantly White neighborhoods. “Alternative” or “predatory” lenders, which charge exorbitant fees, fill “gaps” in services by providing convenient but costly services. We report findings from a community-university research partnership investigating 108 low-income Latinx mothers’ use of alternative lending services (e.g., payday loans, money transfer services), the impact of these services on individuals and families, and barriers and facilitators of mainstream banking use. The majority of respondents had bank accounts but remained underbanked. Frequently cited barriers to mainstream financial services included fees and unexpected charges, uncertainty regarding interest rates, lack of a Social Security number, needing cash quickly, perceived discriminatory treatment, and fear of deportation due to undocumented status. Alternative financial service (e.g., check cashing, cash advance loans) use was widespread as was difficulty repaying these loans. Relational support emerged as an important protective factor against the most exploitative providers. We draw on these and other findings to illustrate how low-income Latinx mothers perceive, experience, and resist predatory lending services. Recommendations for reducing Latinas’ economic exclusion and strengthening financial capabilities are offered.

Emotional and behavioural appeals as key determinants in Ghanaian consumer pre-banking behaviour

“…Therefore, social influence could promote the intensity of impulse purchasing intention in consumer pre-banking. Contrary to expectations, PBC had an insignificant relationship with pre-banking intention, indicating fewer impediments to participating in the Ghanaian banking sector, unlike in Latinos as found by Bullock et al. (2020) and suggests that the consumers had self-confidence in their pre-banking decision-making rather than in their social groups.…”

“…Accordingly, pre-banking intention was a direct antecedent of consumer actual BAB, corroborating previous studies (Milakovi c et al, 2020;Mahmood and Baharun, 2018). Thus, this study presents a noteworthy theoretical contribution, particularly in the financial service sector, in that it has narrowed the theoretical gaps in former research (Bullock et al, 2020;Lazaroiu et al, 2020;Lin et al, 2020) by extending the TPB to account for the emotional and habitual antecedents that affect pre-purchase decisions and their synergistic effect.…”

“…, 2020; Mahmood and Baharun, 2018). Thus, this study presents a noteworthy theoretical contribution, particularly in the financial service sector, in that it has narrowed the theoretical gaps in former research (Bullock et al. , 2020; Lazaroiu et al.…”

“…In low-income countries such as Ghana, about one in four households use the services of alternative financial services (AFS) and about 64% of consumers research on banks' mobile capabilities before opening an account (Bullock et al, 2020). Therefore, the following hypothesis was formulated:…”

Guidelines for psychological practice for people with low-income and economic marginalization: Executive summary.

“…In the United States, there is a long history of assigning economic value to race through legal and property rights (Leong, 2013), resulting in racist practices that contribute to multigenerational economic inequity. In contemporary society, poverty and economic marginalization remain closely tied to racism, as well as sexism, through the practice of excluding people of color from critical social structures, such as banks and other financial services (Bullock et al, 2020). People of color are disproportionally affected by economic stress (Bruner, 2017) and people of color are more likely to also identify as being lower SES (APA, APA Working Group on Stress and Health Disparities, 2017).…”