Living outside the Financial Mainstream: Alternative Financial Service Use among People with Disabilities

McGarity, Stephen V.; Caplan, Mary

doi:10.1080/10875549.2018.1555731

Cited by 6 publications

(14 citation statements)

References 29 publications

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“…While some households with disabilities are not looking for credit, many have either been refused bank credit, deterred from applying for bank credit, or sought non-bank credit (Goodman and Morris, 2019). Instead of using bank credit, which builds a person's credit history and presents lower interest rates, many people with a disability utilize predatory credit AFS (McGarity and Caplan, 2019; Xu, 2019). Credit AFS, however, tend to carry high-interest rates and often trap users in a debt cycle.…”

Section: Literature Backdrop and Hypothesesmentioning

confidence: 99%

“…Low- and moderate-income households often use credit cards with high-interest rates to obtain credit; yet, only one-third of underbanked households with a disability even have a credit card (Goodman and Morris, 2019). And since most banks do not offer small-dollar loans, those with disabilities typically rely on AFS for small loans (McGarity and Caplan, 2019; Xu, 2019). In sum, individuals with disabilities tend to experience a very different personal financial picture and future compared to those without disabilities.…”

Section: Literature Backdrop and Hypothesesmentioning

confidence: 99%

“…Households with lower income levels must spend large portions of their earnings on basic needs, leaving little room for dealing with unexpected financial shocks (Council of Social Service New South Wales, 2014). Furthermore, people with disabilities are twice as likely to be unbanked (Goodman and Morris, 2019), use high-cost alternative financial services (AFS) (McGarity and Caplan, 2019; Xu, 2019) and have health-care access problems and unmet healthcare needs (Horner-Johnson et al. , 2014).…”

Section: Introductionmentioning

confidence: 99%

“…Some prior studies have examined the relationship between a one-dimensional measure of people with disabilities and banking status (Goodman and Morris, 2019; Lim et al. , 2010) or the use of AFS (McGarity and Caplan, 2019). However, to our knowledge, there is no published research that estimates the relationship between various types of disabilities (e.g.…”

Section: Introductionmentioning

confidence: 99%

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Differences in financial inclusion by disability type

Wann

Burke-Smalley²

2022

IJBM

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PurposeThe purpose of this study is to determine the nature of financial inclusion for individuals with various types of disabilities.Design/methodology/approachData from 2015, 2017 and 2019 FDIC Survey of Household Use of Banking and Financial Services was pooled, and binary logistic regressions were used to investigate differences in barriers to financial inclusion (e.g. unbanked) between people with different types of disabilities (e.g. cognitive) and those without such disabilities.FindingsUsing five separate barrier measures, the authors found specific disability types face different barriers to financial inclusion. For example, respondents with cognitive, ambulatory or two or more disabilities were more likely to use nonbank transaction products and alternative financial services. And, those with vision or cognitive disabilities were more likely to be denied or receive reduced credit. When examining aggregate barriers to financial inclusion (total number of barriers faced) respondents with cognitive, ambulatory, hearing or two or more disabilities experienced the lowest degree of financial inclusion in the authors’ dataset.Research limitations/implicationsCausal inference cannot be made due to the cross-sectional nature of the data. The data only covers the US population, and the measurement of disability type could include those with short-term impairments. Further, there may be an omitted variable bias.Practical implicationsBest practices to maximize financial inclusion for those with different disability types should address accessibility issues, bank staff education, financial literacy education and poverty issues. Additional government policies and oversight are also needed to protect and enhance the overall financial inclusion of people with disabilities.Originality/valueTo the best of the authors’ knowledge, this paper is the first to examine the relationship between various barriers to financial inclusion and aggregate barriers to financial inclusion by disability type. Specific disability types are found to face different barriers to financial inclusion.

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Section: Literature Backdrop and Hypothesesmentioning

confidence: 99%

Section: Literature Backdrop and Hypothesesmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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Differences in financial inclusion by disability type

Wann

Burke-Smalley²

2022

IJBM

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“…Despite the passage of the Americans with Disabilities Act 30 years ago, people with disabilities continue to experience substantial barriers to financial stability. Adults with disabilities are more than twice as likely than people without disabilities to find it "very difficult" to cover expenses and pay bills, twice as likely to have past due medical bills, less likely to have set long-term financial goals, more likely to be unbanked (Goodman et al, 2017), and twice as likely to use alternative financial services, such as payday lenders (McGarity & Caplan, 2019). Sen (2004) puts forth two distinct disadvantages experienced by people with disabilities that may explain these financial disparities.…”

Section: Introductionmentioning

confidence: 99%

The Extra Costs Associated With Living With a Disability in the United States

Morris

McGarity

Goodman

et al. 2021

Journal of Disability Policy Studies

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People with disabilities encounter many financial expenses that those without disabilities do not incur. In this article, we provide estimates of the extra costs associated with living with a disability in the United States. Drawing on four nationally representative surveys, we estimate that a household containing an adult with a work disability requires, on average, 29% more income (or an additional $18,322 a year for a household at the median income level) to obtain the same standard of living as a comparable household without a member with a disability. Single adults with disabilities are estimated to have higher costs than those with disabilities who are married, and adults with cognitive impairments are estimated to have higher costs compared to those with other kinds of impairments. We further calculate the federal poverty rate for households that include adults with disabilities adjusted for the direct additional costs of disability. The rate rises from 24% to 35% after adjusting for the extra costs of disability, which would result in an estimated 2.2 million more people with disabilities counted as poor. This suggests that the official poverty measure in the United States substantially underestimates the degree of deprivation experienced by people with disabilities.

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