Briefing
Community Development Financial Institutions as a Means to Overcome Market Failures
Abstract: Neighborhood and information externalities can lead to market failures, leaving communities underinvested and underprovided with financial services. Community development financial institutions (CDFIs) can serve as a means of implementing government subsidies aimed at overcoming these market failures. To spur positive externalities, however, CDFI investments must clear a critical mass threshold, which they do not appear to have been able to achieve to date.
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https://www.richmondfed.org/publications/research/economic_brief/2026/eb_26-14
Description: Briefing
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Bibliographic Information
Provider: Federal Reserve Bank of Richmond
Part of Series: Richmond Fed Economic Brief
Publication Date: 2026-05-06
Volume: 26
Issue: 14