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Does Prior Banking Experience Matter? Differences of the Banked and Unbanked in Individual Development Accounts

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Abstract

Using data from the 4-year American Dream Demonstration, this study compares saving performance and program participation of banked (n = 1,538) and unbanked participants (n = 466) enrolled in 14 IDA programs. The study shows banked participants had $2.74 higher average monthly net deposit (p < 0.05); 5% higher deposit frequency (p < 0.001); and 42% less odds of drop out than unbanked participants (p < 0.001). Moreover, program characteristics such as financial education, monthly saving targets, peer group meetings, and direct deposit are important predictors of program performances. Individual characteristics such as race/ethnicity, home ownership, and income are significantly associated with program performance.

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Acknowledgments

The authors wish to thank the following foundations for support of this paper: the Ford Foundation, Charles Stewart Mott Foundation, FB Heron Foundation, and Metropolitan Life Foundation for funding ADD research; HUD for the Early Dissertation Grant; the IDA program staff at the 14 research sites of the American Dream Demonstration (ADD); the Corporation for Enterprise Development for implementing ADD; Michael Sherraden, director of the Center for Social Development, Lissa Johnson, ADD research project manager; Margaret Clancy, for ensuring quality of the monitoring data; and Mark Schreiner for data management and preparation. Finally, the paper greatly benefited from the comments of Diane Wyant, Susanna Birdsong, and Roderick Rose.

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Authors and Affiliations

  1. School of Social Work, University of North Carolina at Chapel Hill, 325 Pittsboro Street, CB 3550, Chapel Hill, NC, 27599-3550, USA

    Michal Grinstein-Weiss, Yeong H. Yeo, Mathieu R. Despard & Adriane M. Casalotti

  2. School of Social Work, University of Illinois at Urbana-Champaign, 1010 W. Nevada, Urbana, IL, 61801, USA

    Min Zhan

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  1. Michal Grinstein-Weiss
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Correspondence to Michal Grinstein-Weiss.

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Grinstein-Weiss, M., Yeo, Y.H., Despard, M.R. et al. Does Prior Banking Experience Matter? Differences of the Banked and Unbanked in Individual Development Accounts. J Fam Econ Iss 31, 212–227 (2010). https://doi.org/10.1007/s10834-010-9184-5

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