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Working Paper
Financial Literacy, Risk Tolerance, and Cryptocurrency Ownership in the United States
Cryptocurrency owners without sufficient financial literacy and risk tolerance may be financially vulnerable, as the cryptocurrency market is highly volatile and lacks consumer protections. Our study divides cryptocurrency owners into three groups based on their purpose for holding cryptocurrencies—for investment only (investors), for transactions only (transactors), and for a mix of investment and transactions (mix users)—and examines how each group correlates with financial literacy and risk tolerance compared to consumers who do not own cryptocurrencies (nonowners). Using the 2022 ...
Journal Article
Financial Constraints Among Buy Now, Pay Later Users
Buy now, pay later (BNPL) services have become increasingly popular in the United States over the past decade, especially among both younger and financially vulnerable consumers. Although BNPL services may help some consumers manage financial constraints by breaking down purchases into smaller installments and providing access to interest-free credit, the smaller, interest-free installments may also lead some consumers to perceive purchases as more affordable than they really are, increasing the risk of overspending, debt accumulation, and even default.Fumiko Hayashi and Aditi Routh examine ...
Briefing
The Role of Nonbanks and Fintechs in Boosting India’s UPI Person-to-Merchant Transactions
Unified Payments Interface (UPI), a mobile-based instant payment system in India, has grown substantially in the last few years. Indians initially used UPI for person-to-person (P2P) payments, but today use UPI more for person-to-merchant (P2M) payments. Nonbanks and fintechs have contributed to the rapid growth of UPI P2M payments by providing third-party apps, merchant services, and consumer credit, as well as enabling UPI P2M payments to expand beyond India’s borders.
Briefing
U.S. Consumers’ Use of Cryptocurrency for Payments
Some policymakers and payments industry participants expect consumers to use stablecoins—a type of cryptocurrency intended to maintain a stable value relative to some other asset—for payments. However, the share of U.S. consumers who use cryptocurrency for payments has been very small and recently declined slightly. The most cited reason for using cryptocurrency is that the person or business receiving the money preferred it, suggesting many users passively choose cryptocurrency for payments.
Working Paper
Which Types of Unbanked Households Are More (or Less) Likely to Open a Bank Account?
Using multi-year survey data, we conduct a regression model analysis to examine which types of unbanked households are more likely to open a bank account and which types are less likely. We proxy for households’ likelihood of opening a bank account using their prior banking status and interest in having a bank account. Unbanked households who previously had a bank account and are interested in having a bank account are more likely to open an account. These households tend to be more educated, to be native-born, to use alternative financial services, and to have access to digital technology. ...
Working Paper
The Complementary Effects of Financial Education and Payday Lending Regulations on Financial Inclusion
Approximately 5.6 million U.S. households remained unbanked in 2023. We examine the effects of state-mandated high school personal finance coursework on banking outcomes. Because the unbanked population resorts to alternative financial services, such as payday loans, for their financial needs, we also examine the interplay between payday loan regulation and financial education. We find that exposure to personal finance coursework is associated with a lower likelihood of being unbanked and of unbanked adults being uninterested in opening a bank account. This finding holds regardless of whether ...
Briefing
How Do Consumers’ Fraud Experiences Vary with Their Financial Vulnerability?
A sizeable share of U.S. consumers has been exposed to financial fraud. According to the 2024 Survey of Household Economics and Decisionmaking (SHED), in 2023, 21 percent of U.S. consumers experienced financial fraud involving their credit cards, bank accounts, or other financial products. Fraud victims often lose money in a fraud incident and may not fully recover the money later, ultimately sustaining fraud losses. The adverse financial effects of fraud are likely to be most pronounced for financially constrained consumers, as these consumers tend to have little financial cushion to absorb ...