Summit Workgroup A: Research & Evaluation

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Fostering Statewide Initiatives for Economic and Digital Inclusion

 What’s the problem?

Since 1977, banks have spent over $3 trillion on Community Reinvestment Act (CRA) compliance, through investments in affordable housing, financial literacy education, financial inclusion, and economic inclusion. Banks meet their CRA obligation through a blend of employee volunteerism, loans, equity investments and grants.  Recently, it’s been determined that banks can also receive CRA credit for supporting such digital equity-related efforts as developing broadband infrastructure.

Despite the exceptional magnitude and breadth of CRA investments for economic opportunity, it is difficult to locate a central hub for sharing studies regarding which CRA strategies are more or less effective in terms of such key outcomes as: fostering more affordable housing than otherwise would exist, financial literacy programs that not only reach more people (output) but also generate greater evidence of participants’ financial skills and knowledge (impact), and fostering greater participation in living wage jobs.

This is in part due to the inherent complexity of multivariate analysis to tease out to what extent a given CRA investment strategy “causes” such impacts. But other factors, as we’ll consider in a moment, may impede systematically generating greater knowledge about promising and proven CRA investment strategies.

A search of EBSCO’s research databases finds articles on how best to “modernize” CRA regulations in light of the rise of online banking and fintech, and on whether or not the CRA statute itself caused the economic recession of 2008 because CRA requirements compelled banks to make “sub-prime” housing loans (rigorous review of the evidence by the Federal Reserve Bank of Boston found it did not).  

A 2019 study by the Congressional Research Service found that CRA policy itself makes it very difficult to develop empirical knowledge of CRA’s effectiveness.  The three federal agencies that monitor CRA compliance – the Federal Reserve, Federal Deposit Insurance Corporation, and the US Treasury Department’s Office of the Comptroller of the Currency – utilize differing formats for banks to submit their CRA compliance data and for examiners to report on their findings, making it challenging to aggregate CRA performance data by type, low- and moderate-income (LMI) community location and function of investment (e.g., housing vs. financial literacy vs. financial or economic inclusion), and so assess correlations between CRA investments and economic opportunity-related outcomes.  There appears to be no generally accepted taxonomy for classifying self-reporting and examiner reporting data consistent across all sizes and types of CRA-compliant institutions.  Nor is there a proactive policy stipulation assuring banks that they may receive credit toward their CRA requirement for investing in research and evaluation on the effectiveness of their investment strategies.

In 2012, in a very welcome development, the three federal agencies began to hold a major national interagency community reinvestment conference every two years, during which the agencies’ CRA examiners receive training, community development professionals explore the key challenges facing LMI communities for which CRA investments might be a helpful solution, and best CRA investment practices are shared. (See, for example, the summary results of the 2018 NICRC gathering.)

What is still lacking, though, are policy incentives for banks to (a) utilize CRA resources to conduct research and evaluation to assess the effectiveness of their CRA practices, (b) share the resulting insights, and (c) ensure that banks and CRA examiners use a consistent taxonomy for noting the type, function and location of CRA investments, published in a “harvestable” format by which researchers can then grow a more robust knowledge base. Equally, policy needs to be crafted so that banking leaders are not inadvertently penalized for undertaking innovative community reinvestment approaches because of the realistic concern that results of a relatively unsuccessful strategy could be used adversarially by accountability advocates.  At the same time, accountability advocates may themselves be frustrated that it is difficult not only to monitor a given bank’s compliance activities but also to assess their impact.

Several questions warrant attention: 

  • What can policy makers and examiners do to encourage banks to opt to invest CRA resources in research and evaluation, and to encourage or require examiners and banking leaders to use a common taxonomy for examination reports and data sharing?
  • Beyond the much-needed biennial NICRC gatherings, what else might be done to foster sharing promising CRA investment practices less episodically and more rapidly and systematically?
  • What steps can researchers and evaluation firms undertake on their own, irrespective of steps policy makers might take?

How might the National Collaborative for Digital Equity and other summit participants best assist efforts to launch such initiatives?

By the end of Day One workgroup discussion, please be prepared to report out about your thoughts regarding the following question:

What are aspects of this challenge that most need addressing?

 By the end of Day Two workgroup discussion, please be prepared to report out about your thoughts regarding the following questions: 

  1. What strategies does your workgroup recommend be undertaken?


  1. What commitments might workgroup members have made to help implement proposed next steps?


  1. What supports and commitments might you need from NCDE and other stakeholders at the summit to carry out these strategies?