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Complex transactions: Community development financial institutions lending to ethnic entrepreneurs in Los Angeles

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  • R. Varisa Patraporn

Abstract

Despite federal and state efforts to ensure equal access to credit, ethnic disparities in financial capital remain. Community Development Financial Institutions (CDFIs) represent one type of institution working to address this inequality. Based on interviews with the staff of ten Los Angeles, CA (USA) area CDFIs, this article explores the unique way CDFIs lend to ethnic entrepreneurs. The findings highlight the role of CDFIs in providing extensive technical assistance, utilizing flexible lending criteria, and building co-ethnic weak ties. Furthermore, CDFI staff members' specialized knowledge about particular ethnic groups, shared cultural background, and/or language ability allow them to take on greater risk. As the demand for financial capital grows in a tight credit market, it will become increasingly important to understand these community institutions and their potential impact on community development more broadly.

Suggested Citation

  • R. Varisa Patraporn, 2015. "Complex transactions: Community development financial institutions lending to ethnic entrepreneurs in Los Angeles," Community Development, Taylor & Francis Journals, vol. 46(5), pages 479-498, December.
    • Handle: RePEc:taf:comdev:v:46:y:2015:i:5:p:479-498
    DOI: 10.1080/15575330.2015.1079541
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    1. Robert W. Fairlie & Alicia M. Robb, 2008. "Race and Entrepreneurial Success: Black-, Asian-, and White-Owned Businesses in the United States," MIT Press Books, The MIT Press, edition 1, volume 1, number 026206281x, April.
    2. Eric Hangen & Jack Northrup & Michael Swack, 2012. "CDFI industry analysis: summary report," Community Investments, Federal Reserve Bank of San Francisco, vol. 24(Sum), pages 29-3339.
    3. Hossain, Mahabub, 1988. "Credit for alleviation of rural poverty: the Grameen Bank in Bangladesh," Research reports 65, International Food Policy Research Institute (IFPRI).
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