Search Results
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 ...
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
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 ...
Working Paper
The role of race in mortgage lending: revisiting the Boston Fed study
This paper reexamines claims that non-economic discrimination persists in mortgage loan origination decisions. I find that racial differences in outcomes do exist, as minorities fare worse regarding debt-to-income requirements but better for loan-to-value requirements. Overall, significant racial differentials exist only for ``marginal'' applicants and are not present for those with higher incomes or those with no credit problems. Thus, the claim that non-economic discrimination is a general phenomenon is refuted. Further, I can say little regarding the existence of discrimination among ...
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 ...
Journal Article
CRA special lending programs
The Community Reinvestment Act (CRA) of 1977 encourages federally insured banking institutions to help meet the credit needs of their communities, including those of lower-income areas, in a manner consistent with their safe and sound operation. In responding to the CRA, many banking institutions have sought to expand lending to lower-income populations through special lending programs that seek out and assist such borrowers in a variety of ways. These programs, many of which include third parties such as government agencies and nonprofit groups, are often an important element of an ...
Journal Article
The performance and profitability of CRA-related lending
In November 1999, the U.S. Congress asked the Board of Governors of the Federal Reserve System to conduct a comprehensive study of loans made under the Community Reinvestment Act of 1977. The Board?s study focused on the loans? delinquency and default rates?their performance?as well as their profitability. This Commentary reports the results of the study.