Liberty Street Economics: Economic Inequality: Does the CRA Increase Household Access to Credit?

F E D E R A L   R E S E R V E   B A N K   o f   N E W  Y O R K LIBERTY STREET ECONOMICS   Does the CRA Increase Household Access to Credit?     Erica Bucchieri, Jacob Conway, Jack Glaser, and Matthew Plosser    This post examines mortgage issuance to better understand why the Community Reinvestment Act (CRA) has little to no impact on household credit. The authors find banks increase their market share in CRA-target areas by acquiring existing loans, allowing them to satisfy the CRA without impacting the overall supply of credit. This does not mean that the CRA is ineffective. However, the results suggest reforms could increase the efficacy of the CRA to ensure access to credit for consumers.     READ MORE   SUBSCRIBE: Our economists are engaged in ongoing work on themes of economic inequality and equitable growth. Keep up with this analysis via our new subscription option.

 

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