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Community Reinvestment Act Enforcement and Changes in Targeted Lending

Author

Listed:
  • Drew Dahl

    (Utah State University, Logon, UT, uf755@cc.usu.edu)

  • Douglas D. Evanoff

    (Federal Reserve Bank of Chicago, Chicago, IL)

  • Michael F. Spivey

    (Clemson University, Clemson, SC)

Abstract

The Community Reinvestment Act (CRA) encourages banks and savings and loan associations to meet the credit needs of local communities. Controversies surrounding implementation of the CRA, however, have challenged its effectiveness as a tool for increasing loan activity. To determine whether the CRA influences lending, the authors compare the low-income mortgage loans of banks that experience CRA downgrades to those of other banks that are not downgraded. The authors find no evidence consistent with the hypothesis that downgraded banks, in an attempt to reestablish an acceptable rating, increase lending.

Suggested Citation

  • Drew Dahl & Douglas D. Evanoff & Michael F. Spivey, 2002. "Community Reinvestment Act Enforcement and Changes in Targeted Lending," International Regional Science Review, , vol. 25(3), pages 307-322, July.
    • Handle: RePEc:sae:inrsre:v:25:y:2002:i:3:p:307-322
    DOI: 10.1177/016176025003006
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    References listed on IDEAS

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    1. Glenn B. Canner & Wayne Passmore, "undated". "The Community Reinvestment Act and the Profitability of Mortgage-Oriented Banks," Finance and Economics Discussion Series 1997-07, Board of Governors of the Federal Reserve System (U.S.), revised 10 Dec 2019.
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    Cited by:

    1. Drew Dahl & Douglas D. Evanoff & Michael F. Spivey, 2010. "The Community Reinvestment Act and Targeted Mortgage Lending," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 42(7), pages 1351-1372, October.
    2. Lei Ding & Leonard I. Nakamura, 2017. "“Don't Know What You Got Till It’s Gone” — The Effects of the Community Reinvestment Act (CRA) on Mortgage Lending in the Philadelphia Market," Working Papers 17-15, Federal Reserve Bank of Philadelphia.
    3. Neil Bhutta, 2011. "The Community Reinvestment Act and Mortgage Lending to Lower Income Borrowers and Neighborhoods," Journal of Law and Economics, University of Chicago Press, vol. 54(4), pages 953-983.
    4. Lee, Hyojung & Bostic, Raphael W., 2020. "Bank adaptation to neighborhood change: Mortgage lending and the Community Reinvestment Act," Journal of Urban Economics, Elsevier, vol. 116(C).
    5. Neil Bhutta, 2008. "Giving credit where credit is due? the Community Reinvestment Act and mortgage lending in lower-income neighborhoods," Finance and Economics Discussion Series 2008-61, Board of Governors of the Federal Reserve System (U.S.).

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