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Using credit reporting agency data to assess the link between the Community Reinvestment Act and consumer credit outcomes


  • Ana Patricia Muñoz
  • Kristin F. Butcher


We use a regression discontinuity design to investigate the effect of the Community Reinvestment Act on consumer credit outcomes using data from the Federal Reserve Bank of New York’s Consumer Credit Panel database (Equifax data) for the years 2004 to 2012. A bank’s activities in census tracts with median family incomes less than 80 percent of the metropolitan statistical area (MSA) median family income count toward a lending institution’s compliance with CRA rules. Assuming census tracts with median incomes at 79.9 percent of the MSA median are the same as census tracts at 80 percent—except for CRA eligibility—discontinuous changes in consumer credit outcomes at that threshold are evidence of the CRA’s impact. We find no statistically significant effects of the CRA on mortgages or foreclosures, either before or after the financial crisis. However, we do find evidence that CRA expanded broad measures of credit market activity: at the CRA threshold, there is a 9 percent increase in the total number of loans, an increase in the number of people covered by the Equifax data, and an increase in the fraction of individuals with a valid risk score. Despite expanded credit activity, which may increase consumers’ risk for adverse outcomes, there is no significant increase in delinquencies at the CRA threshold.

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  • Ana Patricia Muñoz & Kristin F. Butcher, 2013. "Using credit reporting agency data to assess the link between the Community Reinvestment Act and consumer credit outcomes," Public and Community Affairs Discussion Papers 2013-2, Federal Reserve Bank of Boston.
  • Handle: RePEc:fip:fedbpc:2013-2

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    References listed on IDEAS

    1. Neil Bhutta, 2011. "The Community Reinvestment Act and Mortgage Lending to Lower Income Borrowers and Neighborhoods," Journal of Law and Economics, University of Chicago Press, vol. 54(4), pages 953-983.
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    Cited by:

    1. Brown, James R. & Cookson, J Anthony & Heimer, Rawley, 2014. "Legal Institutions, Credit Markets, and Economic Activity," Working Paper 1434, Federal Reserve Bank of Cleveland.

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    Community Reinvestment Act of 1977 ; Consumer credit;

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