but clear second in this list, with about 6% of respondents identifying this as their main reason. Next, about 2% reported that their main reason was not having confidence in the institution.

These household reports, firstly, fail to support the notion that the unbanked are those who are poor, make small transactions and so find the fixed or variable costs of bank accounts to be too high. Less than 1% of unbanked respondents picked high bank fees or initial deposits as their main reason. Only 0.23% said that the branch is too far away, which is not surprising, since by design distance to the bank branch cannot be a major source of variation in banked status in our data.

Secondly, these self-stated reasons contradict the hypothesis that the unbanked are those who are uncomfortable dealing with modern banks: no more than 1% of unbanked respondents said that they did not have a bank account mainly because there are too many requirements, the bank staff doesn’t treat the clients well, or that they do not know account opening requirements. Thirdly, only 2% said that they did not have confidence in the bank, which runs counter to the distrust hypothesis.

How do these rankings compare with similar self-reports in other surveys? Caskey et al. (2006) report that in similar surveys done in the US and Mexico City, the most frequent answer to this question is indeed some form of the “do not have enough money” response. Based on a 1996 survey of lower-income urban households, Caskey (1997) reports that 53% of respondents said they had no accounts because they had no savings. 54% of the households said they were unbanked because of either high bank fees or the inconvenience of bank locations, 21% because they wanted to keep financial record private, and 17% because they were not comfortable dealing with banks. In a 1998 survey of lower-income communities in New York City and Los Angeles in which the answer “ _I do not have enough savings/money_ ” was not included in the set of possible responses, three frequent responses were not having the money required to open a bank account, high bank fees and not being sure of how to open an account (Caskey et al. (2006)). But notably, 58% of respondents chose “ _none of the reasons listed above_ ”. A 2002 survey of households in Mexico City found that the most popular response (49% of households) was not having enough money, followed at much lower percentages by high minimum balances, low interest rates and lack of trust in banks.

Although not having enough money consistently shows up as the most frequent response in all these surveys, the BANSEFI survey stands out in that unlike in the other surveys, no other reason comes close. This is a puzzle, because as we will see shortly, in the same BANSEFI survey the average unbanked household is not that much poorer than the average banked household. We should note that the phrasing of the response- “ _I haven’t had money to do it_ ”- leaves room for multiple interpretations. Most likely, by choosing this answer the respondent is saying that he does not have “enough” savings relative to some threshold. This threshold could depend on both economic factors, such as the transactions cost of banking, and behavioral or attitudinal factors correlated with education.

# **4   A comparison of banked and unbanked households**

This section summarizes the characteristics of households surveyed by BANSEFI in 2005, splitting them into two groups, the banked and the unbanked. Recall that while the survey is representative of Mexican households with a savings account in a _Caja_ , every