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Research Reveals Challenges in Banking Access for Formerly Incarcerated Individuals

A recent study has found that individuals who have been incarcerated are less likely to have bank accounts upon their release compared to their status prior to serving time. This lack of access to traditional banking could pose significant challenges to their long-term financial stability.

The research, titled “Locked out of banking: The limits of financial inclusion for formerly incarcerated individuals,” was conducted by Brielle Bryan, an assistant professor of sociology at Rice University, and J. Michael Collins, a professor at the University of Wisconsin-Madison. This groundbreaking study is among the first to explore how incarceration impacts banking accessibility. The findings are detailed in the journal Social Science Research.

Bryan emphasized the importance of financial inclusion in the broader context of poverty reduction and opportunities for marginalized groups. “With this study, we aimed to focus specifically on formerly incarcerated individuals, who often find themselves in precarious positions in American society,” she stated.

The study revealed a notable decline in bank account ownership following incarceration, particularly among women and Hispanic individuals, who were found to be disproportionately affected. Moreover, those who managed to maintain bank accounts while incarcerated were typically white and better educated.

“While we can’t pinpoint the exact reasons for the drop in banking access post-incarceration, we have several hypotheses,” Bryan mentioned. “Our analysis suggests that distrust of banks isn’t the key issue, as pretrial detention or arrests do not correlate with reduced bank account ownership.” Instead, she noted that seemingly minor obstacles, such as the need for valid government ID or proof of residence, could significantly hinder the ability to open bank accounts.

“These minor barriers can translate into major challenges for those re-entering society after incarceration,” Bryan explained. “The alternatives to traditional banking, such as payday loans and check-cashing services, are often exploitative and costly, making the issue even more serious.” The lack of banking access can have far-reaching consequences on economic security for those transitioning back into the community.

The authors asserted that the findings underscore the critical need for banking access. As they pointed out, “For individuals trying to reintegrate into society after incarceration, having a bank account is vital. It facilitates saving and accessing funds for important expenses like security deposits, rent, and legal fees.” They further noted that without banking, individuals may struggle with significant hardships related to housing, credit, and wealth accumulation.

Bryan and Collins hope that their research can inspire initiatives that ease the reintegration process for formerly incarcerated individuals, suggesting successful models like Hawaii’s programs that connect individuals in work release to banking services.

More information: Brielle Bryan et al, Locked out of banking: The limits of financial inclusion for formerly incarcerated individuals, Social Science Research (2024). DOI: 10.1016/j.ssresearch.2024.103050

Citation: Locked out of banking: Incarceration is associated with decreased bank account ownership (2024, August 12) retrieved 12 August 2024 from phys.org

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