Community banking and economic development: Lessons from Los Angeles

Among the changes in the field of community development is thegrowing importance of microfinance, both to provide access tocredit and as a vehicle for empowerment. Community banks arerecognized for their role in meeting these goals, although theyremain controversial, as the goals of microfinance are not alwaysagreed upon, with government officials and community membersemphasizing different interests. We examine the Los AngelesCommunity Development Bank to glean further lessons regardingthe role community banks can play in community development.Among the lessons from this experience are that politics areinescapable in the design of community banks; the economicsof banking tends to undervalue community needs; and culturalfactors include both professional and community-level challenges.Accounting for these factors can help community banks empowercommunities to meet the challenges of eliminating poverty.