Does the Community Reinvestment Act Increase Small Business Lending in Lower Income Neighborhoods?

Mee Jung Kim (), Kyung Min Lee and John Earle
Additional contact information
Mee Jung Kim: Sejong University

No 14681, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: We estimate the impact of the Community Reinvestment Act (CRA) on small business lending in lower-income neighborhoods. Using 2004-2016 panel data on census tracts, we apply a combined regression discontinuity and fixed effect method. We find that the number of small business loans increases by about 3 to 4 percent and the total dollar amount of small business loans by about 6 to 10 percent in tracts becoming treated by the CRA. The results are robust along many dimensions and suggest that the CRA has a positive impact on access to finance for small businesses in lower income areas.

Keywords: community reinvestment act; small business lending; financial constraints; lower income neighborhood (search for similar items in EconPapers)
JEL-codes: G21 G28 R58 (search for similar items in EconPapers)
Pages: 10 pages
Date: 2021-08
New Economics Papers: this item is included in nep-ban, nep-cfn, nep-ent and nep-isf
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Published - published in: Economics Letters, 2021, 209, 110146

Downloads: (external link)
https://docs.iza.org/dp14681.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:iza:izadps:dp14681

Ordering information: This working paper can be ordered from
IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany

Access Statistics for this paper

More papers in IZA Discussion Papers from Institute of Labor Economics (IZA) IZA, P.O. Box 7240, D-53072 Bonn, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Holger Hinte ().