Alternative Non-Economic Measures of CDFI Lending Impact
Carolina Small Business Development Fund Research Report and Brief
When small businesses flourish, they start and grow entrepreneurial networks that benefit the entire community. CDFI capital injections thus play an important role in helping generate social capital and other positive socioeconomic impacts. Drawing on 10 years of loan data for CSBDF, we find preliminary evidence that CDFIs are “moving the needle” in this area. Our models suggest CDFI loans issued to minority-owned firms are positively related to higher levels of community level social capital.
WHY THIS MATTERS
The main output for CDFIs is the provision of affordable financing. In practice, this means CDFI impacts are often viewed measured through things like job creation and other economic metrics. At CSBDF, we believe positive economic impacts are a necessary but not sufficient condition to being an effective community development institution. There is a need to reimagine the CDFI evaluation paradigm to include non-economic impacts, including how lending activities shape community-level social capital.
GET THE DATA
We’re committed to sharing our data so that it can be replicated by other researchers. Data for this publication can be accessed at CSBDF’s dataverse.
DOWNLOAD THE BRIEF AND FULL REPORT:
Sabatelle, Jason, and McCall, Jamie. 2021. “Alternative Non-Economic
Measures of CDFI Lending Impact: An Exploratory Analysis.” Carolina Small Business Development Fund. Raleigh, North Carolina. https://doi.org/10.46712/alternative.impact.