The Social Context of Regulatory Policy: Does Civil Society Matter?

Through the use of facilitative approaches to regulation, policymakers can foster collaborative action. However, questions remain as to the social conditions necessary to achieve the desired outcomes. I use the case of the Community Reinvestment Act (CRA) of 1977 to explore the influence of civil society on the behavior of lenders subject to CRA-regulation. CRA can be classified as a regulatory policy that combines elements of coercion and facilitation to increase private sector lending in low-income and minority communities. In areas where there is an active coalition focused on community reinvestment, lenders are more likely to originate lower-priced loans than their counterparts in an area without an active coalition. The results suggest the effects of facilitative approaches to regulation may vary across places, contingent upon the social context.