New Research: FINRA Foundation Examines Financial Capability of Women Behind Bars

Study Highlights Grim Financial Challenges and Gender Disparities

WASHINGTON, D.C.–New research from the FINRA Investor Education Foundation offers insights into the financial knowledge and habits of incarcerated women across multiple measures of financial capability and literacy, exposing the deep financial challenges facing women in prisons.

The study, Gender and Financial Capability from Behind Bars, used primary survey data collected from 515 women and men incarcerated in five correctional facilities in Arkansas, in concert with financial capability data from the FINRA Foundation’s National Financial Capability Study.

Of note, the study found that incarcerated women in Arkansas have the highest poverty rates and use of predatory lenders, as well as the lowest levels of financial literacy and financial assets—in comparison to incarcerated men and the state’s general population.

“This research highlights the challenges that women, in particular, face as they re-enter society after time in prison—and it couldn’t be more timely as coronavirus infection rates lead jurisdictions to release more inmates,” said Gerri Walsh, President of the FINRA Foundation and FINRA’s Senior Vice President for Investor Education. “More than just a snapshot of men and women incarcerated in Arkansas, this data provides practitioners in the field a unique opportunity to better understand the financial challenges facing women behind bars and to explore community resources, tools and other supports necessary to increase financial literacy and financial capability.”

Some of the key findings from the study include:

• More than half of the incarcerated women surveyed live below the poverty line.
  Fifty-four percent of incarcerated females live below the poverty line compared to only 16 percent of non-incarcerated females. Eighteen percent of non-incarcerated males live below the poverty line compared to 26 percent for incarcerated males.
   
• Incarcerated women do not have retirement savings.  
  Only nine percent of incarcerated females and 10 percent of incarcerated males had retirement savings, compared to 42 percent of non-incarcerated females and 50 percent of non-incarcerated males.
   
• Incarcerated women are the most frequent users of high-cost borrowing methods. The use of these non-traditional banking methods was positively associated with the likelihood of recidivating.  
  Eighty-six percent of incarcerated females and 75 percent of incarcerated males use pawn shops, compared to only 24 percent and 22 percent of non-incarcerated females and males, respectively.
  
  Furthermore, 55 percent of incarcerated females and 45 percent of incarcerated males used rent-to-own stores, compared to only 16 percent of females and 11 percent of males.
  
  More than 75 percent of both incarcerated males and females use check-cashing services, compared to less than 10 percent of men and women not in prison.
   
• Incarcerated women have not accumulated important assets in wealth building, like owning a home.  
  Although the gender gap in homeownership is similar for both inmates and the general population (at 8 points and 7 points, respectively), fewer than 1 in 5 incarcerated women (18 percent) own homes compared to nearly two-thirds (63 percent) of women in the general population.
   
• Female inmates scored the worst on a three-question financial literacy quiz.
  Incarcerated males scored significantly higher on the three-question scale, with an average of 1.14 correct, compared to 0.69 correct answers for incarcerated females. Among the general public, females also demonstrated a lower mean score of 1.56 correct, compared to 2.08 correct for males.

“These findings demonstrate the growing need for additional research and resources as communities consider how to address gender gaps in general and more specifically, the even larger divide for incarcerated women,” Walsh said. 

The study was authored by San Diego State University Associate Professor Timothy Brown and California State University (Northridge) Assistant Professor Marc Glidden. To access the full report, datasets, survey instrument and methodology, visit USFinancialCapability.org.

About the FINRA Investor Education Foundation

The FINRA Investor Education Foundation supports innovative research and educational projects that give underserved Americans the knowledge, skills and tools to make sound financial decisions throughout life. For more information about FINRA Foundation initiatives, visit www.finrafoundation.org.

About FINRA

FINRA is a not-for-profit organization dedicated to investor protection and market integrity. It regulates one critical part of the securities industry—brokerage firms doing business with the public in the United States. FINRA, overseen by the SEC, writes rules, examines for and enforces compliance with FINRA rules and federal securities laws, registers broker-dealer personnel and offers them education and training, and informs the investing public. In addition, FINRA provides surveillance and other regulatory services for equities and options markets, as well as trade reporting and other industry utilities. FINRA also administers a dispute resolution forum for investors and brokerage firms and their registered employees. For more information, visit www.finra.org.