Assistant Professor of Management's study reveals school savings accounts can dry up in ‘financial deserts’

Assistant Professor of Management Ian Dunham and his two collaborators are the first to study the connection between economic inequality, a neighborhood’s financial service environment, and the college savings rates at nearby schools.

In collaboration with the San Francisco Office of Financial Empowerment, Dunham and his co-authors analyzed data from more than 21,000 Children's savings accounts (CSAs) at SFUSD’s 74 elementary schools and mapped all the banks, credit unions, elementary schools and alternative financial services institutions, such as payday lenders, in the city. What stood out to them was the relationship between schools with the lowest savings rates, neighborhood demographics and the number of check-cashing establishments.

“Our study finds that schools in comparatively low-income neighborhoods that have few brick-and-mortar banks and credit unions and more payday lenders, check-cashing outlets and pawn shops, have lower savings rates,” said Dunham. He calls such neighborhoods “financial deserts” for their lack of mainstream banking options.

Dunham said he hopes this research will also encourage entrepreneurs to develop new technologies, be it an app or an online bank program with low fees, geared toward low- to moderate-income Americans. SF State could be on the forefront of this type of technology, according to Dunham. The Lam Family College of Business recently received a $25 million gift from alumnus and digital currency entrepreneur Chris Larsen, his wife Lyna Lam, and nonprofit Rippleworks that will launch a FinTech Initiative within the college - aiming to make every day financial transactions, such as money transfers and banking, cheaper and more accessible.

Durham suggests we "embrace technology and develop new financial services and products that reduce reliance on fringe financial services and make it easier to save and achieve personal financial goals."


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