We develop three empirical models to identify the impact of Community Reinvestment Act (CRA) agreements on the mortgage lending behavior of small banking institutions during the period 1990–1997. CRA agreements are pledges banking institutions make to extend levels of credit to targeted populations and are often used by institutions to reaffirm their commitment to the goals of the CRA. We hypothesize that CRA agreements increase the level of competition for mortgage loans in the targeted area, which in turn causes a reduction in the quantity of mortgage credit to be supplied by community banks. Consistent with the quantity hypothesis, the results show that CRA agreements are associated with less mortgage lending, including lending in lower-income communities (CRA lending) and in minority communities (minority lending), by small community lenders. Evidence does not support a second hypothesis – that community banks respond to the increased competition by providing credit to riskier individuals.

This paper provides new empirical evidence on the relationship between personal commitments and the allocation of small business credit. The data suggest that personal commitments are important for firms seeking certain types of loans. Guarantees are more prevalent than collateral and organization type (corporate versus noncorporate status) appears to be particularly important in determining commitment use. No systematic relationship is observed between commitment use and owner wealth. Personal commitments appear to be substitutes for business collateral, at least for lines of credit, while personal collateral and personal guarantees do not seem to substitute for each other. Personal commitments have generally become more important to small business lending since the late 1980s.

The utility of homeownership as a household wealth-building vehicle has long been recognized. In recent years, homeownership has been promoted as an important strategy for improving the financial situation of lowand moderateincome households. However, this strategy does not come without its risks, as homeownership exposes households to potential troubles along multiple dimensions. This paper highlights the conditions under which a homeownership strategy is likely to be effective. A key contribution is its significant focus on the risks of homeownership, which are assessed by studying the distribution of foreclosure across neighborhoods. According to the Current Population Survey (CPS), between 1994 and 2006, homeownership rates among households in the first and second income quartiles increased by 11.1 and 12.9 percent, respectively. This exceeded the 10.3 percent increase observed for the general population and was due in part to several factors. First, income, education, and wealth for lowand moderate-income households all increased significantly over this period (Arthur B. Kennickell 2006), which increased the accesAssets And Credit Among Low-inCome HouseHoLds †

This paper examines the association between consolidation and changes in levels of bank branching as measured by changes in the number of bank branches per capita. Using a specially-constructed data set, we address this issue as well as how this relationship varies with the type of consolidation and initial regulatory, competitive, and market conditions. We find that merges where merging institutions have branch networks which overlap within a ZIP code (within-ZIP merger) are strongly associated with a reduction in offices per capita in that ZIP code. This result is robust across time and holds in both rural and urban areas. The findings also suggest that, contrary to popularly held views, consolidation is not unambiguously negatively associated with changes in the number of banking offices per capita. Neither within-market-but-not-within-ZIP mergers nor out-of-market mergers consistently show such a relationship. We also find that the relationships between within-ZIP and within-market-but-not-within-ZIP mergers and changes in the number of bank offices per capita are more negative in low-income neighborhoods than in other neighborhoods. However, because most states now have unrestricted branching and because savings associations are less prevalent and financially healthier than in the past, these findings may not be indicative of future branching patterns.