Community Development Finance Institutions (CDFIs): Geographies of financial inclusion in the US and UK

Abstract

The financial exclusion of enterprise is a concept that has been largely neglected by economic geographers. This is surprising given the attention dedicated to personal financial exclusion and alternative sources of finance. This paper compares financial inclusion policies in deprived areas of the United States (US) and United Kingdom (UK) through the example of Community Development Finance Institutions (CDFIs). CDFIs help overcome financial exclusion by providing local sources of loan finance to micro, small-and-medium-sized enterprises and social enterprises. Drawing upon interviews with key actors within the CDFI sector in the US and UK respectively, the paper aims to compare the CDFI landscape across the US and UK through the provision of finance for enterprise. This is in order to understand the geographies of finance that are being created by such alternative financial institutions thereby contributing to financial inclusion debates. The research concludes that although CDFIs do provide an important source of finance to excluded enterprises, policy initiatives have created uneven geographical coverage and market gaps leaving marked spaces of financial exclusion.