Data and Code for: Refining the Definition of the Unbanked

Using data from the FDIC National Survey of Unbanked and Underbanked Households, this paper proposes three new definitions that account for the interest in being banked: (i) the banking participation rate (BPR), defined as those out of the adult population that are either banked or not currently banked but interested in having a bank account; (ii) the redefined unbanked rate (UR), defined as the share of banking participants that are not currently banked but are interested in having a bank account; and (iii) the out-of-banking rate (OBR), defined as those out of the adult population that are not currently banked and not interested in having a bank account. We show that interest in obtaining a bank account is an important differentiator, and the two redefined populations differ in policy-relevant ways: The unbanked cite financial and past credit and banking problems as main reasons for not having a bank account, while out-of-banking households cite lack of trust in the banking system increasingly more. We argue that policymakers need to take these dynamics into consideration when designing policies aimed at improving financial inclusion.<br>