The Financial Assimilation of Immigrants in the U.S.

Access to and use of financial services can affect a wide range of economic behaviors, including decisions about consumption, saving, home ownership, business formation, investment and retirement. These services have the potential to empower disadvantaged groups and give them greater control over their economic future. However, little is known about the use of financial services among one historically impoverished group - immigrants to the United States. To what extent do they participate in mainstream financial institutions? Does their general assimilation into American society include assimilation into American financial life as well?

Una Okonkwo Osili of Indiana University and Anna Paulson of the Federal Reserve Bank of Chicago plan the first national study to investigate the financial integration of immigrants. They will first determine the level of difference in the use of financial services and levels of financial assets held by immigrants and the native-born. They will then assess how participation in financial markets changes as immigrants become acclimated to life in the United States, and how their country of origin affects their adaptation to the U.S. economy. Finally, they will evaluate whether or not immigrants gravitate toward the financial behavior of native-born members of their own ethnic or racial group.

Osili and Paulson will combine longitudinal data with information from the U.S. Census and data they have compiled on country of origin in order to distinguish between real changes in the behavior of particular immigrants over time and the aggregate changes caused by demographic shifts in the immigrant population. By determining the way in which immigrants take advantage of these beneficial services, this research will help determine whether the private sector holds a latent ability to fight poverty among immigrants and their children.

Reports and Publications:

• Osili, Una Okonkwo and Anna Paulson. 2008a. "Institutions and Financial Development: Evidence from International Migrants in the U.S." Review of Economics and Statistics, 90 (3): 498-517. (Gated)