Essay regarding Microfinance

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Progress Access Publication 13 Sept. 2010 2005

Community banking and

economic development: Lessons

from Los Angeles

Greg Andranovich, Ali Modarres

and Gerry Riposa

Abstract Among the list of changes in the field of community development may be the growing importance of microfinance, the two to provide access to credit and as a vehicle for empowerment. Community banks are notable for their role in meeting these kinds of goals, even though remain controversial, as the goals of microfinance are generally not always decided, with authorities officials and community users emphasizing several interests. We examine the Los Angeles Community Development Bank to glean

further lessons regarding the position community banks can play in community development. Among the lessons using this experience happen to be that politics are inescapable in the design of community banking institutions; the economics of financial tends to undervalue community demands; and social factors consist of both specialist and community-level challenges. Accounting for these factors can help community banks enable communities to meet the problems of eliminating poverty.


This article investigates community development in La, more specifically the part of the Oregon Community Creation Bank (the Bank) since an agent of empowerment. The latest research upon community banking companies and other microfinance institutions and programmes suggests that understanding the tasks for countrywide, local, and community/household institutions and actors can strengthen performance (Gulli, 1998). Furthermore, case research indicate that the role pertaining to the state in microfinance programmes includes offering a framework for meeting complex policy targets and difficulties, such as lowering poverty (Zeller and Meyer, 2002). For instance , 194

Community Development Journal Vol 42 No two April 2007 pp. 194 –205

Community banking and economic creation in Los Angeles


the role with the state contains ensuring sufficient time for the microfinance institutions to develop the time to operate without subsidies and time to develop the organizational capacity to operate efficiently (Lapenu, 2002). Indeed, it is becoming obvious that the non-financial part of microfinance programmes is really as important as economics to efficacy (Turner and Jolis, 1999; Yunus, 1999). In part, this has yielded linkages with empowerment strategies counting on local people and the abilities of community institutions to define, articulate, and negotiate their own agendas and mobilize people and solutions around community concerns (Arnstein, 1969; Clavel et al., 1997; Friedmann, 1992; Modarres, 2003). In light of the increased use of non-state organizations to implement general public policy, especially community-based agencies perceived as great at facilitating community needs and mobilizing residents, empowerment has turned into a widely approved policy goal. However , can easily community financial institutions be created to address complex policy challenges? We examine the personal, economic, and cultural circumstance of the La Community Advancement Bank to supply some answers to this issue. The research with this article was conducted by authors as part of a larger task examining governance in Are usually. Over a six-year period, selection interviews were conducted with the commanders of the companies discussed in this article, public conferences were attended, and internal memoranda and other documents had been collected and analysed to provide evidence with this account.

Community development and federal coverage

After the 1992 electoral victory, the Clinton supervision fashioned a great urban policy initiative known as ‘empowerment zones' built about federal – local cordons through money, tax incentives, and technological assistance to develop businesses, create jobs, and provide social pain relief to inner city poverty...

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