Collaborators or Competitors? Exploring the Relationships between Community Development Financial Institutions and Conventional Lenders in Small Business Finance

This study examines the nature of the interaction of banks and community development financial institutions (CDFIs) in small business lending. We examine the experience of six different CDFIs that vary by size, corporate structure, and market. We explore how they both collaborate and compete with regulated lenders, and how changes in local and national market dynamics affect their activities. Our case studies are not necessarily representative of the CDFI industry, but they offer insights on the factors that shape CDFIs' interactions with and responses to more mainstream institutions. Our findings are therefore more descriptive than prescriptive, although we offer suggestions for both CDFI practice and future research

Collaborators or competitors? Exploring the relationships between community development financial institutions and conventional lenders in small business finance

This study examines the nature of the interaction of banks and community development financial institutions (CDFIs) in small business lending. We examine the experience of six different CDFIs that vary by size, corporate structure, and market. We explore how they both collaborate and compete with regulated lenders, and how changes in local and national market dynamics affect their activities. Our case studies are not necessarily representative of the CDFI industry, but they offer insights on the factors that shape CDFIs’ interactions with and responses to more mainstream institutions. Our findings are therefore more descriptive than prescriptive, although we offer suggestions for both CDFI practice and future research.Community development ; Small business - Finance

Trends in financial market concentration and their implications for market stability

The link between financial market concentration and stability is a topic of great interest to policymakers and other market participants. Are concentrated markets - those where a relatively small number of firms hold large market shares - inherently more prone to disruption? This article considers that question by drawing on academic studies as well as introducing new analysis. Like other researchers, the authors find an ambiguous relationship between concentration and instability when a large firm in a concentrated market fails. In a complementary review of concentration trends across a number of specific markets, the authors document that most U.S. wholesale credit and capital markets are only moderately concentrated, and that concentration trends are mixed - rising in some markets and falling in others. The article also identifies market characteristics that might lead to greater, or less, concern about the consequences of a large firm's exit. It argues that the ease of substitution by other firms in concentrated markets is a critical factor supporting market resiliency.Financial markets ; Capital market ; Theory of the firm

Financial Innovations Roundtable: Developing practical solutions to scale up integrated community development strategies

Essays from experts affiliated with the “think-do” tank , the Financial Innovations Roundtable, housed at the Carsey Institute at the University of New Hampshire

Residential Appraisal and the Lending Process: A Survey of Issues

This article surveys mainly academic literature for issues concerning the use of appraisals in the residential lending process. The development of appraisal methodologies is reviewed, and the strengths and weaknesses of various appraisal techniques are assessed. Issues relating to the use of neighborhood characteristics in appraisals for lending purposes are also explored. Finally, institutional incentives that give rise to biased and self-serving appraisals and possible solutions to these incentive problems are examined.

Capital markets, CDFIs, and organizational credit risk

Can Community Development Financial Institutions (CDFIs) get unlimited amounts of low cost, unsecured, short- and long-term funding from the capital markets based on their organizational credit risk? Can they get pricing, flexibility, and procedural parity with for-profit corporations of equivalent credit risk? One of the key objectives of this book is to explain the reasons why the answer to the two questions above remains “no.” The other two key objectives are to show the inner workings of what has been done to date to overcome the obstacles so that we don’t have to retrace the same steps and recommend additional disciplines that position CDFIs to take advantage of the mechanisms of the capital markets once the markets stabilize

Credit risk rating at large U.S. banks

Large banks use internally developed credit rating systems to differentiate the riskiness of their commercial loans. Internal ratings are an essential ingredient of effective credit risk management for such banks, whose commercial borrowers may number in the tens of thousands. This article describes these rating systems, how their design varies across institutions, and how they are used in risk management. The article also outlines conceptual and practical difficulties currently faced by banks in achieving accurate and consistent ratings and describes ways in which some institutions have attempted to deal with these difficulties. This article is based on a detailed review of policy documents and internal management reports from the fifty largest U.S. bank holding companies and interviews by the authors at a selection of these institutions.Credit ratings ; Risk

The Business Consortium Fund: working capital for MBEs

The New England Minority Purchasing Council offers minority business enterprises (MBEs) help in obtaining short-term working capital.Commercial loans - New England ; Small business - New England ; Minority business enterprises - New England

Energy Transparency in the Multifamily Housing Sector

Mirroring recent trends in other real estate sectors, the multifamily housing sector is subject to an increasing number of rules and regulations related to energy-performance benchmarking and performance disclosure. State and local governments are moving rapidly to institutionalize benchmarking and make energy performance information available in the real estate marketplace, while major lending institutions are taking initial steps to factor building energy performance into financial products. The goal of these new rules is to enable transparent building energy-performance information to drive energy efficiency improvements in multifamily housing that lower energy bills for residents; contribute to greater local housing affordability; and new jobs and services related to energy efficiency. Many multifamily owners and operators have never benchmarked the energy performance of their buildings, while other parties -- including state, local, and federal policymakers, tenants, utilities, and lenders -- have little or no access to building energy-performance information that can help shape real estate decisions or inform the development of policies, incentives, and financial vehicles to advance energy efficiency. This critical shortage of information about building energy performance has prevented property markets from valuing energy efficiency and severely undermined both public and private efforts to increase the energy efficiency of multifamily housing.While energy benchmarking and disclosure policies are an innovative approach to overcome energy-performance information gaps in the multifamily sector, several challenges must be addressed. The multifamily sector is fragmented and resists a one-size-fits-all approach, ranging from low-income public housing to luxury properties, all with varied sources of public and private financing. Policies must reflect and accommodate the diversity of both the building stock and its stakeholders. In many cases, underlying barriers continue to limit the ability of many multifamily owners to conduct benchmarking and other energy-performance assessment measures. This report is intended to serve as a guide for policymakers and multifamily stakeholders on benchmarking and disclosure rules and regulations. It provides an introduction to the multifamily housing sector, followed by a thorough review of existing benchmarking and disclosure policies and an assessment of continuing policy challenges and opportunities

Collateralised loan obligations (CLOs) : a primer

The following descriptive paper surveys the various types of loan securitisation and provides a working definition of so-called collateralised loan obligations (CLOs). Free of the common rhetoric and slogans, which sometimes substitute for understanding of the complex nature of structured finance, this paper describes the theoretical foundations of this specialised form of loan securitisation. Not only the distinctive properties of CLOs, but also the information economics inherent in the transfer of credit risk will be considered, so that we can equally privilege the critical aspects of security design in the structuring of CLO transactions