Working Paper

Refining the Definition of the Unbanked

Abstract: We propose a new way to classify individuals without a bank account, accounting for their actual interest in being banked. Analogous to how unemployment statistics are defined and estimated, we differentiate the individuals that do not have a bank account and would like to have one (the “unbanked”) from individuals that do not have a bank account and are not interested in having one (the “out of banking population”). Using FDIC data, we show the evolution over time of these new measures and show that the two groups differ in policy-relevant ways. While the unbanked mostly cite financial and past credit or banking history problems as reasons for not having a bank account, the out of banking population cites a growing mistrust toward the traditional banking system. Policymakers should consider these factors when designing policies aimed at increasing financial inclusion.

JEL Classification: ;

https://doi.org/10.17016/FEDS.2025.033

Bibliographic Information

Provider: Board of Governors of the Federal Reserve System (U.S.)

Part of Series: Finance and Economics Discussion Series

Publication Date: 2025-05-09

Number: 2025-033