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Impacts of the Community Reinvestment Act on Neighborhood Change and Gentrification

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  • John Fitzgerald
  • Samuel P. Vitello

Abstract

The Community Reinvestment Act (CRA) encourages bank lending in low- and moderate-income areas. We use a regression discontinuity design that exploits the relative-income threshold that distinguishes CRA-eligible from ineligible neighborhoods (census tracts) and find little evidence that CRA has contributed to neighborhood changes associated with gentrification in eligible areas. Over the 1989-1999 period, we find that eligible tracts had greater increases in mean income relative to ineligible tracts, but we find little evidence that the CRA caused decreases in the proportion of long-term residents or increases in the proportion of White or college-educated residents.

Suggested Citation

  • John Fitzgerald & Samuel P. Vitello, 2014. "Impacts of the Community Reinvestment Act on Neighborhood Change and Gentrification," Housing Policy Debate, Taylor & Francis Journals, vol. 24(2), pages 446-466, April.
    • Handle: RePEc:taf:houspd:v:24:y:2014:i:2:p:446-466
    DOI: 10.1080/10511482.2013.858364
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    1. Amy Ellen Schwartz, 2004. "Introduction," Chapters, in: Amy Ellen Schwartz (ed.), City Taxes, City Spending, chapter 1, Edward Elgar Publishing.
    2. Eric S. Belsky & Michael H. Schill & Anthony M.J. Yezer, 2001. "The effect of the Community Reinvestment Act of bank and thrift home purchase mortgage lending," Proceedings 794, Federal Reserve Bank of Chicago.
    3. Robert B. Avery & Paul S. Calem & Glenn B. Canner, 2003. "The effects of the Community Reinvestment Act on local communities," Proceedings 878, Federal Reserve Bank of Chicago.
    4. Bostic Raphael & Paulson Anna L & Mehran Hamid & Saidenberg Marc, 2005. "Regulatory Incentives and Consolidation: The Case of Commercial Bank Mergers and the Community Reinvestment Act," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 5(1), pages 1-27, April.
    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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    Cited by:

    1. Jane Rongerude & Mônica Haddad, 2016. "Cores and Peripheries: Spatial Analysis of Housing Choice Voucher Distribution in the San Francisco Bay Area Region, 2000--2010," Housing Policy Debate, Taylor & Francis Journals, vol. 26(3), pages 417-436, May.
    2. 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).

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