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Abstract

South Shore Bank, the country's first community development bank, began in 1973 with the dual objectives of making a profit and improving conditions in the community of South Shore, Chicago. Although the bank has been hailed as a success, there has been little work on defining or measuring its performance against either objective. This article compares the bank's financial performance against comparable banks (holding companies) and the demographic changes in the South Shore community against changes in the contiguous communities. The results suggest that both the bank and the community exhibit worse relative performance. Additional research is needed to verify these results and to determine how to improve the effectiveness and efficiency of community development banks. © 1995 John Wiley & Sons, Inc.