Bank Performance and the Community Reinvestment Act (Cra) of 1977

This study is designed to examine the effect of the CRA on the financial performance of 60 banks. For this sample of banks, performance measures such as return on assets (ROA), return on equity (ROE), salary expense ratios improve significantly in the five year period after the passage of the CRA. Furthermore, smaller banks benefitted more than bigger banks. An important implication is that banks may be able to improve their performance by penetration of lending markets in disadvantaged neighborhoods, as required by the CRA