Microfinance

& Oxford University Press and Community Development Journal. 2005
All rights reserved. For permissions, please email: [e-mail] 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,
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Community Development

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