WHO HOLDS THE CARDS? FINANCIAL EXCLUSION AND THE PROMISE OF MUNICIPAL IDENTIFICATION FOR UNDOCUMENTED IMMIGRANTS

Abstract

In 2023, an estimated 5.6 million households in the United States were unbanked, meaning that not a single member of the household maintained any type of account at a bank or credit union. Although a large body of scholarship has emerged over the course of the past half century that aims to understand America’s unbanked population, few scholars have examined bank account ownership in the undocumented immigrant population. This thesis contributes to this emerging area of financial inclusion research in two ways. Firstly, I use data from the 2021 and 2023 FDIC National Survey of Unbanked and Underbanked Households to observe rates of bank account ownership across natural-born, documented immigrant, and undocumented immigrant populations. In addition, I analyze the reasons cited by unbanked households to explain their bank account ownership status. In doing so, I use an adapted version of Borjas and Cassidy’s 2019 documentation status imputation methodology. My findings suggest that undocumented individuals are unbanked at higher rates than their natural-born and documented immigrant counterparts, and that personal identification constraints disproportionately impede bank account ownership in this population. Despite this latter finding, and perhaps surprisingly, personal identification constraints are not the most cited reason that households with undocumented members use to explain their unbanked status. Secondly, I interrogate New York City’s municipal identification program as a potential policy solution to the personal identification constraints that prevent some members of the undocumented population from transitioning into bank account ownership. To these ends, I draw upon content from interviews and written comments from six senior New York City government officials, as well as two federal banking regulators that work on personal identification-related matters. My findings from this analysis demonstrate that, although this program may have the potential to promote the financial inclusion of undocumented individuals, various factors, including the limited acceptance of municipal identification cards at local financial institutions and supplementary identification requirements, have complicated its success on this front. In my final section, I address additional policy interventions at the municipal, state, and federal levels that can promote the acceptance of New York City’s municipal identification cards by additional banks.