Impact of Immigrant Origin Home Country Level of Financial Access and Inclusion on Immigrant US Financial Literacy Scores

Impact of Immigrant Origin Home Country Level of Financial Access and Inclusion on Immigrant US Financial Literacy Scores

Mary Conway

Dissertation (Bachelor/Master/Phd)

Ohio State University

2020

Success in the United States is determined by financial success and security, both heavily related to an understanding of basic finances. The lack of financial literacy around the world has been studied in more detail since the early 2000s, but the majority of studies look at impacts of lack of financial literacy rather than factors leading to varying levels of financial literacy. Having a high level of financial literacy roughly means having an understanding of credit, banking and saving. This is especially important for immigrants in the United States without support systems. Immigrants on average are less financially literate than non-immigrants. To look beyond simply immigrant status, this study examines how immigrant's scores on financial literacy exams are related to their home country level of financial inclusion in an attempt to control for the status of the country of origin. The World Bank's Global Findex Database was used to measure inclusion. The database measures the percentage of the population that have a financial account in a bank, microfinance account, or other financial account in 148 different countries. We believe greater access to financial institutions will lead to higher financial literacy test scores in the US, as observed by the Understanding America Study's financial literacy database. This database measures household characteristics, financial literacy scores, and demographic factors for approximately 7000 people. When measuring the impact of immigrant status, home country financial inclusion and controlling for education, age and gender, the level of financial inclusion is always statistically significant. Without immigrant status as a factor, inclusion is very significant and when run with immigrant status, is loses some significance but remains a good indicator of success on financial literacy exams. While the Understanding America Study does have limitations (it does not list the age of immigration, or allow for information about home country education, income or social standing), this exploratory study shows that country of origin access to finances should be a factor considered in policy and education for immigrants.