Funded on September 1, 2021

Lack of access to capital is a recurring theme in discussions of poverty and inequality among racial groups. Discriminatory lending practices, such as “redlining,” are thought to limit accumulation of wealth and the growth of businesses in lower income and minority neighborhoods. The negative consequences may include lower employment and incomes for minorities living in these areas, and they may be worse still for women of color. Yet there is little direct evidence on the extent to which financial barriers have such effects. 

This project will estimate the effects of the Community Reinvestment Act (CRA), a policy intended to reduce inequality through financial access, on disparities in entrepreneurship, employment, and poverty outcomes by race and ethnicity, asking whether the CRA reduces racial inequality in entrepreneurship, employment, and income.  

This research will provide critical evidence to government agencies implementing the CRA, community organizations working to enforce and improve the policy, and policymakers involved in the ongoing efforts to reform the CRA and to encourage agencies to incorporate goals of racial justice.