Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/241166 
Year of Publication: 
2021
Series/Report no.: 
Staff Report No. 973
Publisher: 
Federal Reserve Bank of New York, New York, NY
Abstract: 
Nearly 25 percent of low-income households in the United States are unbanked. High fees are often cited as a reason they remain unbanked, leading some to believe that limiting bank fees would improve financial inclusion. We use the federal preemption of state limits on overdraft fees to study the impact of fee ceilings on low-income households. After preemption, national banks raise overdraft fees relative to state-chartered banks in affected states. However, banks in affected states also provide more overdraft credit and bounce a smaller share of checks following preemption. The share of low-income households that are unbanked decreases, consistent with price ceilings causing the rationing of both overdraft and banking services.
Subjects: 
banks
credit
overdraft
unbanked
inclusion
checks
price ceilings
usury
JEL: 
D1
E43
G21
G38
G5
Document Type: 
Working Paper

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