Title Page

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Copyright

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Contents

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About the Authors

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pp. ix-x

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Chapter 1: Savings, Assets, Credit, and Banking Among Low-Income Households: Introduction and Overview

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pp. 1-22

Low-income individuals often lack access to the sort of financial services that middle-income families take for granted, such as checking accounts, bank loans, or easily utilized saving opportunities. High-cost financial services, barriers to saving, lack of insurance, and credit constraints increase the economic challenges faced by low-income families. The contributors to this volume analyze the financial constraints and choices of low-income families and describe the ways ...

Part I: The Financial Lives of Low-Income Families

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Chapter 2: The Assets and Liabilities Held by Low-Income Families

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pp. 25-65

There are many reasons to be interested in the assets and liabilities held by American households. Net worth, the difference between assets and liabilities, can be used to maintain living standards when families are hit with adverse employment, income, or health shocks. These resources may provide the critical buffer that allows a poor family to fix a broken car and remain employed ...

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Chapter 3: Financial Services, Saving, and Borrowing Among Low- and Moderate-Income Households: Evidence from the Detroit Area Household Financial Services Survey

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pp. 66-96

This chapter presents new empirical evidence documenting the financial services behavior and attitudes of low- and moderate-income (LMI) households. The Detroit Area Household Financial Services (DAHFS) survey uses a random, stratified sample to explore the full range of financial services used by LMI households, together with systematic measures of household preference ...

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Chapter 4: Banking Low-Income Populations: Perspectives from South Africa

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pp. 97-120

When Muhammad Yunus was starting Grameen Bank in Bangladesh in the late 1970s, Mary Houghton and Ron Grzywinski, founders of Shorebank, the leading community development bank in the United States, made repeated trips to Bangladesh to assist the novice banker and his funders. The international exchange went two ways. In the mid-1980s, Muhammad Yunus met Bill and Hillary Clinton in Washington, and Yunus inspired the Clintons to help ...

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Chapter 5: Savings Policy and Decisionmaking in Low-Income Households

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pp. 121-145

Theories about poverty, held both by social scientists and by regular folks, typically fall into one of two camps: those who regard the behaviors of the economically disadvantaged as calculated adaptations to prevailing circumstances, and those who view these behaviors as emanating from a unique “culture of poverty” that is rife with deviant values. The first view presumes that people are highly rational, hold coherent, well-informed, and justified beliefs, and ...

Part II: Exploring Patterns of Use and Policies by Type of Asset

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Chapter 6: Using Financial Innovation to Support Savers: From Coercion to Excitement

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pp. 149-190

In certain stylized economic models, household savings emerge mechanically and effortlessly as informed rational agents maximize lifetime consumption in light of their likely income streams, their needs, and the hazards they might encounter. In other models, households are massively confused about intertemporal trade-offs. They employ a set of time-inconsistent discount rates to evaluate options that vary greatly from period to period, and their resultant decisions may ...

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Chapter 7: Individual Development Accounts and Asset-Building Policy: Lessons and Directions

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pp. 191-217

This chapter addresses individual development accounts (IDAs), which feature matched savings for the poor as a strategy for building assets. A large, multi-method, and continuing research project known as the American Dream Demonstration (ADD) provides the empirical foundation for the discussion. Several research methods and key results from ADD and other studies are ...

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Chapter 8: Homeownership: America’s Dream?

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pp. 218-256

Living in a single-family, owner-occupied dwelling unit is central to the American conception of a secure and successful life—the quintessential “American dream.” Study after study has justified the interest in homeownership among Americans by claiming that it confers benefits both to individuals and to the society as a whole. First and foremost, homeownership fosters asset-building ...

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Chapter 9: Patterns of Credit Card Use Among Low- and Moderate-Income Households

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pp. 257-284

Ensuring that the poorer segments of the population have access to financial products and services has taken on increased significance as policymakers have come to understand the broad social ramifications of inclusive financial regimes. Access not only promotes savings but also enables the poor to manage cash flows and to meet basic needs such as health care, food, and housing. In the United States, the last few decades have seen remarkable progress on that front as low- and ...

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Chapter 10: Immigrants’ Access to Financial Services and Asset Accumulation

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pp. 285-317

More than 191 million people live outside their country of birth, and about 20 percent of these emigrants live in the United States (United Nations 2005). Today at least one in nine U.S. residents, or 35 million people, were born abroad, and nearly one in five U.S. schoolchildren have an immigrant parent (Capps et al. 2004). Immigrants make up a disproportionate share of low and moderate-income ...

Index

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pp. 319-326