20 Years of Financial Access in the US

Despite recent changes in the way financial services are provided, to this day, commercial banks are still arguably the most important providers of saving and investment products. These financial services allow households to trade off consumption today and tomorrow in a process referred to as consumption smoothing. The process of trading off consumption today for consumption tomorrow (and vice-versa) allows households to “maximise” their lifetime utility (as an economist would put it), which in simpler terms means to look for a proper balance between spending and saving during different stages of our lives so that consumption is more or less “stable”.

For instance, retirement accounts enable people to set aside money during their working life to then be consumed in retirement. Similarly, a personal loan allows us to increase consumption today at the expense of a potential reduction in consumption tomorrow. These two are examples of financial services offered by commercial banks whose access (or lack thereof) could have a significant impact on households living standards and their ability to mitigate unexpected events (e.g. job loss).

Despite its importance, the extent to which households have access to financial services (also referred to as financial inclusion) is hard to measure. Most available indicators rely on survey data and unavoidably have to trade depth for breadth, providing very detailed financial access data but usually at aggregate levels (see Global Findex).


This map attempts to provide a more granular measure of financial access. One that provides geographical differences in the access to financial services across US counties. Specifically, the map characterises the number of bank branches per 100,000 people for each US county. Despite new technological developments, proximity to financial providers is still an important determinant of whether people can access basic financial services such as bank accounts and personal loans. Hence, having more branches in a specific region (after adjusting for its size) can serve as a proxy for its overall state of financial inclusion. Over the last 20 years, counties in the US have experienced important changes in this measure of financial inclusion. Relative to the late 1990s, nowadays most counties present higher levels, however, geographical differences persist and seem to be very consistent over time.

There are of course important limitations with this characterisation of financial access. One can argue these geographical differences could be “demand-driven”, that is, caused by differences in the degree to which certain regions prefer to consume these services. Nevertheless, given the aforementioned importance financial services have in allowing people to smooth consumption and mitigate risks, this measure may still provide important information on where people are able to balance their spending more effectively.

2 thoughts on “20 Years of Financial Access in the US

  1. Banks have always been, are and will be important in the commercial and business relations of humanity, most of them have contributed to the development of societies
    I believe that access to financial services obeys the objectives and needs of people. In the map it is observed that the regions that have more branches are those of the east and west coasts, which may be the most populated, but at the same time the least American. On the other hand, the central states such as Nebraska, Kansas, the Dakotas, instead of growing, present fewer branches, even in some sectors, where there are currently fewer than 10 years ago, perhaps because they always maintained a financial balance of their homes, without using the financial services offered by banks.
    I congratulate you on your study, because it facilitates having indicators that can be used from different angles. I suggest very kindly try to determine which basic financial products are the ones that have motivated the increase of branches in places where there is more growth of them

    Liked by 1 person

    1. Thanks for the comment. This financial access measure does control for population size but of course, ignores any other potential factor that can explain why certain regions have a higher bank branch density. Data on what specific financial services different regions demand is (to my knowledge) not available at level required to complement this measure. However, I agree that such information would provide a much more accurate characterisation of financial access.


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