Financial firms expanded account and credit card holdings across all income groups

Evidence

Figure 2 presents data on the number of accounts of all forms other than credit cards that households have with financial institutions. Here, we see roughly parallel growth across the SES groups, which imply that financial services firms were able to get households throughout the distribution to increase their consumption of their products. The changes in the average number of accounts from 1992 until 2007 are statistically significant for each group except for the top 2%. But, clearly the differences between the levels of consumption remain across groups. The highest SES households had somewhere around 5.5 such accounts in 1992 and that grew to 5.6 in 2007 while the lowest income household only had 1 in 1995, which grew to 1.5 in 2007. Figure 3 contains data on the average number of credit cards in each household by the SES group. Here, we see a similar pattern. There is a statistically significant increase in the number of credit cards held by each group from 1989 until 2007. While higher SES households tend to have more credit cards in general, the financial industry succeeded in getting all people to open and maintain more accounts. The slightly widening gap between the top SES groups and the bottom suggests this trend was more pronounced among the affluent. — Neil Fligstein & Adam Goldstein, The Emergence of a Finance Culture in…, 92

Categorization

• XREF: Connects to literatures on financial inclusion and the democratization of credit (e.g., Rajan’s fault lines, subprime expansion) — the ‘democratization’ thesis is that finance spread downward, which this data partly supports and partly complicates since gaps persist. — connects to: Financialization expanded by selling financial products directly to households — Neil Fligstein & Adam Goldstein, The Emergence of a Finance Culture in…, 10

Related

• Financialization expanded by selling financial products directly to households (similarity 0.83)
• Research on household financialization remains fragmented across separate markets (similarity 0.78)

Broader Connections

• Financialization expanded by selling financial products directly to households #expands (0.92) — Neil Fligstein & Adam Goldstein, The Emergence of a Finance Culture in…, 10