WOODSTOCK INSTITUTE | SEPTEMBER 2014 September 30, 2014 Access to Capital: To Have and Have Not...

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

mailto:[email protected]

Overview

• Context• Purpose• Sources and methods• Results and mapping


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


Foreclosures and Vacancies


Income and Employment


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


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


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


Housing Units by Income and Race


Mortgage Applications per 100 Units


Probability of Mortgage Origination


Mortgage Originations per 100 Units


Average Amount Originated per Unit


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


Businesses by Income and Race


Number of Loans per Business


Amount of Loans per Business


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


Total Mortgage Amount Originated


Total Business Loans Originated


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


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


Mortgage and Business Deciles


Mapping the Decile Distribution


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



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

mailto:[email protected]

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