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Spotlight on Research: The Impact of Government Subsidized Lending: Community Development Financial Institutions Fund

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  • Marvin M. Smith

Abstract

Access to credit in all segments of the population not only enhances the financial viability of individuals and their communities but also contributes to a robust economy. However, for various reasons, the private sector might not supply an adequate amount of credit or capital to meet the demand in certain areas. In these instances, the government might step in and bridge the gap. One approach taken by the federal government is to provide funds from the Community Development Financial Institutions (CDFI) Fund to financial intermediaries such as community development financial institutions (CDFIs), which in turn supply the credit and capital to the populations in need. While the federal government?s effort to correct an imbalance is laudable, questions might be raised as to its effectiveness and possible undue political influence. These concerns are addressed in a study by Kristle Romero Corts and Josh Lerner.1 The following is a summary of their paper.

Suggested Citation

  • Marvin M. Smith, 2013. "Spotlight on Research: The Impact of Government Subsidized Lending: Community Development Financial Institutions Fund," Cascade, Federal Reserve Bank of Philadelphia, vol. 2, October.
    • Handle: RePEc:fip:fedpca:0031
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    File URL: https://www.philadelphiafed.org/-/media/frbp/assets/community-development/articles/cascade/83/cascade_no-83.pdf
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