Distrust of banks among the unbanked and banked

What is it about?

Trust in banks and other traditional financial service institutions is known to be an important descriptor of the choice to remain unbanked. Using data from a large national dataset and a conceptual framework borrowed from the health services profession, univariate statistics, a Random Forest Boruta algorithm, and a logit model were used to examine the factors associated with distrust in banks. Results from the analyses show that distrust of banks is multi-layered where being older, believing the country is heading in the wrong direction, and being less confident in one’s ability to obtain a personal loan in the amount of $1 to $999 are important factors related to distrust of banks among the unbanked. The paper provides a discussion about ways these variables can be utilized to address the persistent problem of unbanked status in the United States. Implications for practitioners, researchers, and policymakers are provided.

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