Washington: U.S. Treasury Department’s CDFIs Fund issued two reports providing the first-ever comparative analysis and evaluation of the effectiveness of Community Development Financial Institutions (CDFIs) as compared to mainstream lenders. The findings confirm that CDFIs are resilient and a reliable resource for capital in areas that need it the most.
“The reports released today demonstrate that CDFIs that receive financial assistance from the CDFI Fund are meeting their mission to promote economic growth by providing access to credit, capital, and financial services to underserved populations and distressed communities,” said Annie Donovan, Director of the CDFI Fund. “These reports demonstrate that CDFIs are a vibrant and essential part of the financial services industry and that institutions can successfully and responsibly lend to low-income people and in low-income communities.”
These reports found that CDFIs have no more risk than conventional lenders and that they perform nearly just as well as mainstream financial institutions. The first report, CDFIs Stepping Into the Breach: An Impact Evaluation Summary Report, undertaken by Michael Swack, Eric Hangen and Jack Northrup from the Carsey School of Public Policy at the University of New Hampshire, is an analysis of the impact of financial assistance awards from the CDFI Program on CDFI loan fund recipients. The second report, Introduction to Risk and Efficiency among CDFIs: A Statistical Evaluation using Multiple Methods, conducted by Gregory Fairchild from the Darden School of Business at the University of Virginia and Ruo Jia from the Stanford Graduate School of Business, is an analysis of CDFI banks and credit unions to assess their risk of failure and their operational efficiency relative to mainstream financial institutions.
Key highlights from the Carsey School report include:
Key highlights from the Darden School report include:
Links to Reports:
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