Barriers to Banking: A Mixed‐Methods Investigation of Previously Incarcerated Individuals' Banking Perceptions and Financial Knowledge

• Published date: 01 December 2019
• Author: Katherine S. Mielitz,Joy Clady,Meghaan Lurtz,Kristy Archuleta
• Date: 01 December 2019
• DOI: http://doi.org/10.1111/joca.12260

1748 THE JOURNAL OF CONSUMER AFFAIRS

KATHERINE S. MIELITZ, JOY CLADY, MEGHAAN LURTZ,

AND KRISTY ARCHULETA

Barriers to Banking: A Mixed-Methods Investigation

of Previously Incarcerated Individuals’ Banking

Perceptions and Financial Knowledge

Minimal research currently exists on the nancial aspects, including

nancial knowledge and capability,that impact previously incarcerated

individuals. However,the reality is that many currently and previously

incarcerated individuals have never interacted with nancial services

and, if they have, they had limited exposure. The focus of the current

research study was to examine previously incarcerated individuals’

banking perceptions, banking behaviors, and nancial knowledge by

employing a mixed methodology using a sequential explanatory design.

Across case analyses discoveredthree themes of (a) barriers to banking,

(b) prudency of banking, and (c) condence versus trepidation. The

ndings in this study provide implications for nancial institutions and

policymakers and suggested solutions are addressed.

For previously incarcerated individuals, transitioning back into the main-

stream can be a frightening and difcult process, especially when they

are not equipped with the necessary knowledge and skills to help them

adapt (Mielitz et al. 2018a; Pager 2003). Financial literacy is one area of

research that has shown most Americans have low nancial knowledge

and capability, with research reporting that most of the population does

not possess a passing grade for nancial knowledge (Fernandes, Lynch Jr.,

and Netemeyer 2014; Lusardi and Mitchell 2014; Lusardi, Mitchell, and

Curto 2014). Other works have specically addressed low nancial knowl-

edge of inmates (Koenig 2007; Mielitz and MacDonald 2016; Mielitz,

MacDonald, and Lurtz 2018b). Minimal research currently exists on the

nancial aspects, including nancial knowledge and capability,that impact

Katherine S. Mielitz (kate.mielitz@okstate.edu) is Assistant Professor at Oklahoma State Uni-

versity. Joy Clady (cladyjoy@yahoo.com) is a PhD Candidate at Kansas State University. Meghaan

Lurtz (meg.lurtz@gmail.com) is a recent PhD graduate from Kansas State University.Kristy Archuleta

(karchuleta@uga.edu) is Associate Professor at Universityof Georgia. This article would not have been

possible without the support of Tommy Fountain, Georgia Transitional Centers Coordinator. Addi-

tionally, support from the Cary M. Maguire Fellowship in Applied Ethics (awarded to K. Mielitz,

2015–2016) was instrumental in the retention of participants. The authors would also like to thank all

the Transitional Center Superintendents for their support in primary data collection for this project.

The Journal of Consumer Affairs, Winter 2019: 1748–1774

DOI: 10.1111/joca.12260

Copyright 2019 by The American Council on Consumer Interests

WINTER 2019 VOLUME 53, NUMBER 4 1749

previously incarcerated individuals. However, the reality is that many

currently and previously incarcerated individuals have never interacted

with nancial services and, if they have, they had limited exposure. Many

inmates are low-income at the time of arrest (James 2004), and low-income

populations tend to have less banking experience (FDIC 2014b; Heckman

and Hanna 2015; Shobe et al. 2013).

The focus of the current research study was to examine previously incar-

cerated individuals’ banking perceptions, banking behaviors, and nancial

knowledge by employing a mixed methodology using a sequential explana-

tory design. In Phase 1, quantitative data were used to test the associations

between previous nancial behaviors and nancial knowledge. In other

words, is banking experience (i.e., banking behavior) associated with nan-

cial knowledge? In Phase 2, qualitative data further examined howbanking

behavior and perceptions of the banking system differ between previously

incarcerated individuals who possess higher and lower nancial knowl-

edge. Understanding how banking perceptions, banking behaviors, and

nancial knowledge relate can aid researchers, policymakers, and those

working with these populations to create research-informed policy and

programs that can more successfully prepare incarcerated individuals for

transition into society. The overarching research question used to guide

this study was: “What are the banking perceptions, banking behaviors, and

nancial knowledge of previously incarcerated individuals?”

LITERATURE REVIEW

Financial Knowledge

Financial knowledge and nancial literacy are frequently used inter-

changeably (Huston 2010). As the literature around these topics has devel-

oped, nancial literacy refers to the ability to apply knowledge, whereas

nancial knowledge speaks only to awareness and familiarityabout general

nancial topics (e.g., budgeting, credit, insurance, and ination). Nation-

ally, nancial knowledge, as measured by objective nancial knowledge

assessment scores, has been low (Lusardi, Mitchell, and Curto 2014;

Lusardi and Tufano 2015). The lack of knowledge has been measured

from high school age students to older adults. High school students who

participated in the Jump$tart Coalition for Personal Financial Literacy sur-

vey, on average, had poor performance on credit, personal nance, and

investment questions (Mandell 2008). In other studies, adults have not

fared much better. One study, which utilized the Financial Industry Regu-

latory Authority (FINRA) Investor Education Foundation’s 2012 Financial