Social capital and household financial participation
Insights from the UK Savings Bank Movement
Many households around the world still do not use banks, even though barriers to access have been reduced or removed entirely in many regions. While the economics and finance literature has studied the role of access to finance and has generally found a positive effect in terms of financial inclusion, the factors that increase a household’s propensity to become banked – and continue to participate in financial institutions – have not been studied. Despite the benefits for households of opening a bank account even in the absence of credit, such as interest payments, the accumulation of liquid wealth and security of funds, there is still a sizeable unbanked population across both developing and developed countries.
This raises the important policy question of what can be done to encourage account uptake by households. This project aims to investigate what motivates households to open a bank account by collecting and analysing not-previously-used data on the UK Savings Bank Movement of the 19th century, which is one of the earliest examples of formal household participation in banks, and which saw over a million previously unbanked depositors open accounts. The project seeks to reveal not only why households begin to use financial products and services, but also what may be behind their decision to continue to use them in the long run, including the potential explanatory factors of trust, social capital, religion and other cultural factors.