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Community Development Financial Institutions and the Segmentation of Underserved Markets

Research funded by Abt Associates for the Community Development Financial Institutions Fund, U.S. Treasury Department

Researchers examine whether community development financial institutions serve racial and minority populations and what factors help them serve those markets successfully.

Project Overview

Center researchers in 2008 examined whether certain attributes of community development financial institutions (CDFIs) were correlated with greater success in serving racial and/or ethnic minority populations.

Researchers sought to determine whether minority-owned CDFIs were achieving higher levels of service among minority communities and whether two factors contributed to their success: specifically targeting services to members of the community and understanding cultural norms.

Findings suggested that there were benefits to minority ownership of CDFIs, such as significantly greater number of more transactions, which suggest they are more active in minority communities.

Key informant interviews suggested ways that CDFIs could be more effective in reaching minority communities and improve their level of services in historically underserved markets, moving toward the bi-cultural approach.

Researchers concluded that more analysis and more-detailed data were needed to determine whether the character of the ownership of a CDFI determines how well it can serve a given community.

The UNC Center for Community Capital conducts research and policy analysis on ways to make financial services work better for more people and communities.

 

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