WOODSTOCK INSTITUTE | SEPTEMBER 2014 September 30, 2014 Access to Capital: To Have and Have Not...
Transcript of WOODSTOCK INSTITUTE | SEPTEMBER 2014 September 30, 2014 Access to Capital: To Have and Have Not...
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WOODSTOCK INSTITUTE | SEPTEMBER 2014
September 30, 2014
Access to Capital: To Have and Have Not
Spencer M. Cowan | Vice PresidentWoodstock Institute | Chicago, IllinoisP 312.368.0310 | F [email protected]
@woodstockinst
WoodstockInstitute
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Overview
• Context• Purpose• Sources and methods• Results and mapping
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Context of this Research
• Chicago and six county region– includes Chicago, Cook
County, and adjacent counties
• From 2008 to 2012• Persistent patterns of
disadvantage– population, foreclosures,
vacancies, income, and employment
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Foreclosures and Vacancies
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Income and Employment
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Purpose of this Research
• Explore the concept of risk-layering– multiple factors with cumulative or
multiplicative impact– mutually reinforcing
• Examine mortgage and business lending– see if the pattern mirrors existing
disadvantage
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Sources
• Mortgage loans– Home Mortgage Disclosure Act
• Small business loans– Community Reinvestment Act– HUD/USPS vacancy dataset
• Income, race, and housing units– Federal Financial Institutions Examination
Council– Decennial census
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Mortgage Lending
• Examined patterns of mortgage lending– all property types, first lien, purchase
• Analysis by income and racial characteristics of the census tract– low-, moderate-, middle-, and upper-income– majority white, majority minority
• For the period 2008 – 2012
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Housing Units by Income and Race
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Mortgage Applications per 100 Units
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Probability of Mortgage Origination
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Mortgage Originations per 100 Units
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Average Amount Originated per Unit
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Small Business Loans
• Examined patterns of small loans to businesses– loans, lines of credit, credit cards– amounts under $1,000,000
• Analysis by income and racial characteristics of the census tract– low-, moderate-, middle-, and upper-income– majority white, majority minority
• For the period 2008 – 2012
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Businesses by Income and Race
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Number of Loans per Business
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Amount of Loans per Business
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Findings
• Probability of mortgage origination– higher in majority white tracts than in majority
minority tracts regardless of tract income level
• For every tract income level– number and average amount of mortgages
and small business loans were lower in majority minority tracts than in majority white tracts
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Total Mortgage Amount Originated
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Total Business Loans Originated
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Findings
• Low- and moderate-income, majority minority tracts receive a smaller share of mortgages and small business loans than their share of housing and businesses– 20.2 percent of units, 6.4 percent of mortgage
volume– 13.6 percent of businesses, 7.8 percent of
small business loan volume
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Analysis of Lending Patterns
• Categorized 77 Chicago Community Areas into deciles– based on average mortgage amount per
housing unit– based on average loan amount per business
• Cross-tabulation of Community Areas– to show extent to which tracts lack access to
both types of credit
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Mortgage and Business Deciles
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Mapping the Decile Distribution
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Conclusions
• Disadvantage is multi-layered– foreclosures, vacancies, income,
employment, and access to capital tend to overlap
• Addressing the multiple symptoms simultaneously may be necessary to overcome the problems
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WOODSTOCK INSTITUTE | SEPTEMBER 2014
September 30, 2014
Access to Capital: To Have and Have Not
Spencer M. Cowan | Vice PresidentWoodstock Institute | Chicago, IllinoisP 312.368.0310 | F [email protected]
@woodstockinst
WoodstockInstitute