The purpose of this study is to study bank deserts, their location and characteristics, using pre- and post-pandemic data, with aggregation to communities (i.e. PUMAs) with approximately 100,000 residents.
The study uses traditional FDIC data to measure bank deserts at the census tract level in 2015 and 2023, correcting for population density and land area, with 10% cutoffs, separately for metro and rural areas. Deserts are aggregated to PUMAs and compared for population characteristics drawn from the American Community Survey. Comparisons across counties and states are provided.
Bank deserts expanded by approximately one-third from 2015 to 2023, while the characteristics of deserts remained largely unchanged. In rural areas, bank deserts are consistently related to socioeconomic disadvantage, such as poverty, a lack of income, ethnic/racial minorities and Indian reservations, but the pattern is less consistent in metropolitan areas, where they are negatively related to African Americans and Hispanics and unrelated to poverty. Indeed, numerous deserts exist in relatively affluent metro areas.
The PUMA-level approach allowed identification of bank deserts in more granular communities relative to, for example, counties or cities. As a result, although most severe metro bank deserts appear in Southern states, two notable 2023 deserts were found in the Bronx, NYC. Of greater import, in contrast to some earlier studies, we find that metro deserts are not significantly related to disadvantage, likely due to the expansion of online banking.
We conclude that efforts to counter bank deserts should target deserts in disadvantaged communities rather than bank deserts in general.
The PUMA-level approach allowed identification of bank deserts in more granular communities relative to, e.g. counties or cities. As a result, although most severe metro bank deserts appear in Southern states, two notable 2023 deserts were found in the Bronx, NYC. Of greater import, in contrast to some earlier studies, we found that metro deserts are not significantly related to disadvantage, likely due to the expansion of on-line banking.
