Microfinance
& Oxford University Press and Community Development Journal. 2005
All rights reserved. For permissions, please email: journals.permissions@oxfordjournals.org doi:10.1093/cdj/bsi097 Advance Access Publication 13 September 2005
Community banking and economic development: Lessons from Los Angeles
Greg Andranovich, Ali Modarres and Gerry Riposa
Abstract Among the changes in the field of community development is the growing importance of microfinance, both to provide access to credit and as a vehicle for empowerment. Community banks are recognized for their role in meeting these goals, although they remain controversial, as the goals of microfinance are not always agreed upon, with government officials and community members emphasizing different interests. We examine the Los Angeles Community Development Bank to glean further lessons regarding the role community banks can play in community development. Among the lessons from this experience are that politics are inescapable in the design of community banks; the economics of banking tends to undervalue community needs; and cultural factors include both professional and community-level challenges.
Accounting for these factors can help community banks empower communities to meet the challenges of eliminating poverty.
Introduction
This article examines community development in Los Angeles, more specifically the role of the Los Angeles Community Development Bank
(the Bank) as an agent of empowerment. Recent research on community banks and other microfinance institutions and programmes suggests that understanding the roles for national, local, and community/household institutions and actors can bolster performance (Gulli, 1998). Furthermore, case studies indicate that the role for the state in microfinance programmes includes providing a framework for meeting complex policy objectives and challenges, such as reducing poverty (Zeller and Meyer, 2002). For example,
194
Community Development
All rights reserved. For permissions, please email: journals.permissions@oxfordjournals.org doi:10.1093/cdj/bsi097 Advance Access Publication 13 September 2005
Community banking and economic development: Lessons from Los Angeles
Greg Andranovich, Ali Modarres and Gerry Riposa
Abstract Among the changes in the field of community development is the growing importance of microfinance, both to provide access to credit and as a vehicle for empowerment. Community banks are recognized for their role in meeting these goals, although they remain controversial, as the goals of microfinance are not always agreed upon, with government officials and community members emphasizing different interests. We examine the Los Angeles Community Development Bank to glean further lessons regarding the role community banks can play in community development. Among the lessons from this experience are that politics are inescapable in the design of community banks; the economics of banking tends to undervalue community needs; and cultural factors include both professional and community-level challenges.
Accounting for these factors can help community banks empower communities to meet the challenges of eliminating poverty.
Introduction
This article examines community development in Los Angeles, more specifically the role of the Los Angeles Community Development Bank
(the Bank) as an agent of empowerment. Recent research on community banks and other microfinance institutions and programmes suggests that understanding the roles for national, local, and community/household institutions and actors can bolster performance (Gulli, 1998). Furthermore, case studies indicate that the role for the state in microfinance programmes includes providing a framework for meeting complex policy objectives and challenges, such as reducing poverty (Zeller and Meyer, 2002). For example,
194
Community Development
References: Arnstein, S. (1969) A ladder of citizen participation, Journal of the American Institute of Planners, 35 (July), 216 –224. Clavel, P., Pitt, J. and Yin, J. (1997) The community option in urban policy, Urban Affairs Review, 32, 435– 458. Dymski, G. A. and Veitch, J. M. (1992) Race and the financial dynamics of urban growth, in G Friedmann, J. (1992) Empowerment: The Politics of Alternative Development, Basil Blackwell, Cambridge, MA. Gulli, H. (1998) Microfinance and Poverty: Questioning the Conventional Wisdom, Inter-American Development Bank, Washington, DC. Gunn, C. and Gunn, H. D. (1991) Reclaiming Capital: Democratic Initiatives and Community Development, Cornell University Press, Ithaca, NY. Intermediary Programs. (1997) Intermediary programs, CBD Target Zone, 1 (Second Quarter), 1– 2. Lapenu, C. (2002) The microfinance revolution: Implications for the role of the state, in M Liebschutz, S. F. (1995) Empowerment zones and enterprise communities: Reorienting federalism on distressed communities, Publius, 25, 117– 132. Los Angeles Community Development Bank (LACDB). (1996) Annual Business Plan, LACDB, Los Angeles, CA. Los Angeles Community Development Bank (LACDB). (1997) Annual Business Plan, LACDB, Los Angeles, CA. Los Angeles Community Development Bank (LACDB). (1999a) Report by the Los Angeles Community Development Bank to the Los Angeles City Council, 10 March, Los Angeles Community Development Bank (LACDB). (1999b) Chronology of the LACDB board of directors actions of the Copeland Beverage Group credit Los Angeles Community Development Bank (LACDB). (2000a) Annual Business Plan, LACDB, Los Angeles, CA. Los Angeles Community Development Bank (LACDB). (2000b) Report to the City of Los Angeles (90 day report), 10 October, LACDB, Los Angeles, CA. Modarres, A. (2003) The dialectic of development in the US urban policies: An alternative theory of policy, Cities, 20(1), 41– 49. Riposa, G. (1996) From enterprise zones to empowerment zones, American Behavioral Scientist, 39, 536–551. Servon, L. J. (1999) Bootstrap Capital: Microenterprises and the American Poor, Brookings, Washington, DC. Taub, R. P. (1988) Community Capitalism, Harvard Business School Press, Boston, MA. Turner, R. S. (1999) Entrepreneurial neighborhood initiatives: Political capital in community development, Economic Development Quarterly, 13, 15 –22. Yunus, M. and Jolis, A. (1999) Banker to the Poor: Micro-Lending and the Battle Against World Poverty, Perseus Books, New York. Zeller, M. and Meyer, R. L., eds. (2002) The Triangle of Microfinance: Financial Sustainability, Outreach, and Impact, Johns Hopkins University Press, Baltimore.