Search Results
Working Paper
Effects of the Community Reinvestment Act (CRA) on Small Business Lending
This study provides new evidence on the effectiveness of the Community Reinvestment Act (CRA) on small business lending by focusing on a sample of neighborhoods with changed CRA eligibility status across the country because of an exogenous policy shock in 2013. The results of difference-in-differences analysis provide consistent evidence that the CRA promotes small business lending, especially in terms of number of loan originations, in lower-income neighborhoods. The generally positive effects of the CRA are sensitive to the types of CRA treatment. Losing CRA eligibility status has a ...
Journal Article
Trends in home purchase lending: consolidation and the Community Reinvestment Act
Consolidation among banking institutions has substantially changed the structure of the banking industry. Between 1975 and 1997, the number of commercial banks and savings associations declined more than 40 percent. Over the same broad period, the market for home mortgage lending has also changed substantially. Notably, home mortgage lending is no longer primarily the province of banking institutions operating in the communities in which they have banking offices. In recent decades, mortgage and finance companies and banking organizations operating outside their local communities have gained ...
Working Paper
Supplier relationships and small business use of trade credit
This paper sheds some light on the empirical importance of supplier relationships, including ethnic ties, for the use of trade credit by minority-owned small businesses. Results based on the 1993 National Survey of Small Business Finance (NSSBF) indicate that ethnic differences in the use of trade credit are present after conditioning on an extensive list of control variables. This holds especially for Black-owned businesses, and we find that they use less trade credit, are less likely to take advantage of discounts for early payment, and are more likely to have payments past due. We use ...
Journal Article
New information on lending to small businesses and small farms: the 1996 CRA data
As a consequence of recent revisions to the regulations that implement the Community Reinvestment Act (CRA), new information is now publicly available on the geographic distribution of small loans to businesses and farms and on community development lending. Because small businesses and small farms are more likely than larger ones to borrow small amounts, the CRA data on small loans are likely to provide a reasonable measure of the extension of credit to such businesses. Thus, the CRA data provide new opportunities to gauge the flow of credit to communities with differing economic and ...
Journal Article
Credit risk, credit scoring, and the performance of home mortgages
This article examines the ways institutions involved in mortgage lending assess credit risk and how credit risk relates to loan performance. An increasingly prominent tool used to facilitate the assessment of credit risk in mortgage lending is credit scoring based on credit history and other pertinent data, and the article presents new information about the distribution of credit scores across population groups and how credit scores relate to the performance of loans. In addition, this article takes a special look at the performance of loans made through nontraditional underwriting practices ...
Working Paper
Regulatory incentives and consolidation: the case of commercial bank mergers and the Community Reinvestment Act
Bank regulators are required to consider a bank?s record of providing credit to low- and moderate-income neighborhoods and individuals in approving bank applications for mergers and acquisitions. We test the hypothesis that banks strategically prepare for the regulatory and public scrutiny associated with a merger or acquisition by increasing their lending to low-and moderate-income individuals in anticipation of acquiring another institution. We find evidence in favor of this hypothesis. In particular, we show that the higher the percentage of the institution?s mortgage originations in a ...
Journal Article
Changes in the distribution of banking offices
The past twenty years have been marked by major structural and regulatory changes in the banking industry. This article explores the relationships between these changes and the distribution of "brick and mortar" banking offices between 1975 and 1995. The analysis explores how population shifts, deregulation, and mergers, acquisitions, and failures may have influenced changes in the number and location of banking offices. Special attention is given to changes in banking office distributions across neighborhoods grouped by the median income of their residents and their central city, suburban, ...