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  • March 2013
  • Article
  • Review of Corporate Finance Studies

Bridging the Gap? Government Subsidized Lending and Access to Capital

By: Josh Lerner and Kristle Romero-Cortes
  • Format:Print
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Abstract

The consequences of providing public funds to financial institutions remain controversial. We examine the Community Development Financial Institution (CDFI) Fund's impact on credit union activity, using hitherto little studied U.S. Treasury data. The CDFI Fund grants increase lending at credit unions by 3%. For every dollar awarded, 45 additional cents are loaned out to borrowers in the first year, and up to an additional $1.60 is loaned out within three years. Delinquent loan rates also increase slightly. Our panel results are supported by a broadband regression discontinuity analysis. Politics does not seem to play a role in allocating funding.

Keywords

Financing and Loans; Credit; Government and Politics; Financial Institutions; United States

Citation

Lerner, Josh, and Kristle Romero-Cortes. "Bridging the Gap? Government Subsidized Lending and Access to Capital." Review of Corporate Finance Studies 2, no. 1 (March 2013): 98–128.
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About The Author

Josh Lerner

Entrepreneurial Management
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Related Work

    • March 2013
    • Review of Corporate Finance Studies

    Bridging the Gap? Government Subsidized Lending and Access to Capital

    By: Josh Lerner and Kristle Romero-Cortes
Related Work
  • Bridging the Gap? Government Subsidized Lending and Access to Capital By: Josh Lerner and Kristle Romero-Cortes
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