Chapter 8. Immigrants’ Access to Financial Services and Asset Accumulation

This chapter investigates the financial behavior of immigrants using data from the United States and Italy. While the income and occupational mobility of immigrants have received attention, much less is known about their financial market participation. To explore this aspect of immigrant adaptation, we focus on financial asset ownership, housing market participation, and accumulation of durable goods. We find that immigrants in the US are less likely to participate in a broad array of financial markets than the native-born, even after taking into account differences in socio-economic and demographic factors. Some of the gaps in asset ownership diminish as immigrants accumulate host country experience. However, for forward-looking assets such as stocks and IRA/Keogh accounts, immigrant–native differences tend to persist over time. We find similar native–immigrant gaps with regards to savings accounts and home ownership in Italy. When we investigate the potential explanations for these gaps, we find that institutional characteristics of the country of origin (home country) affect financial participation in the host country. In addition, our results suggest that immigrant financial participation in the home country does not crowd out financial participation in the host country.