Does the Community Reinvestment Act Improve Consumers’ Access to Credit?

We study the impact of the Community Reinvestment Act (CRA) on access to consumer credit since 1999 using an individual-level panel and three distinct identification strategies: a regression discontinuity design centered on a CRA-eligibility cutoff; a comparison of neighboring census blocks; and an event study of changes in eligibility. All three rule out a significant effect of the CRA on consumer borrowing. We show that this is in part explained by a shift in mortgages from nonbanks, which are free from CRA obligations, to banks in need of CRA-eligible mortgages. Our findings underscore the pitfalls of a circumscribed regulatory regime.

Keywords: Community Reinvestment Act, household finance, banks

JEL Classification: G21, G28

Suggested Citation: Suggested Citation

Conway, Jacob and Glaser, Jack N. and Plosser, Matthew C., Does the Community Reinvestment Act Improve Consumers’ Access to Credit? (January 2023). FRB of New York Staff Report No. 1048, Available at SSRN: https://ssrn.com/abstract=4327310 or http://dx.doi.org/10.2139/ssrn.4327310