Financial exclusion in developed countries: a field experiment among migrants and low-income people in Italy

Abstract

We designed an experiment to estimate the socio-economic and behavioral characteristics associated with financial exclusion in a developed economy and the demand for savings products progressively trading-off flexibility for commitment. Our sample includes people in Italy living below the poverty line, stratified by migration status. Despite a large bank branch penetration in the study area, we find a high rate of financial exclusion, with households below the sample median income being unbanked at twice the rate of those above (30% vs. 15%), a difference that is especially significant for migrants. Financial exclusion is associated with poverty and social exclusion, as measured by unemployment, low food consumption, and little help from personal networks. Despite a high-declared willingness to open new accounts and a strong interest in commitment products following a financial education training seminar, actual uptake in the year to follow remains low, suggesting that demand- driven factors besides knowledge hamper access to formal financial services, namely incomes that are perceived too low to make accounts worthwhile. Yet, migrants, especially if non-Muslim, appear more willing to become financially included than non-migrants, suggesting that there are gains to be made by targeting minorities.