This study addresses two related sets of questions. First, how do banks differ with respect to commercial lending across different neighborhoods? Do some communities receive greater or lesser amounts of lending, even when levels of business activity are taken into account? Secondly, and in order to answer this first set of questions, it was necessary to construct a master list of businesses to assess the potential demand for credit in these neighborhoods. Thus, the second set of questions concerns the validity of commercially available business listing sources. Do sources of business listings differ with respect to the comprehensiveness or accuracy of the information they provide?
For this project, we focused on four areas: the Northwest Side (roughly, zip codes 60635, 60639 and 60651); the West Side (60624 and 60644); Lawndale (60623); and the Southwest Side (60629). We used lending data available through the Chicago Municipal Depository Ordinance (the latest available year is 1988), under which banks which wish to receive City deposits must disclose their commercial lending portfolios by census tract.
Our initial findings are that of the banks included in our study, American National Bank, Exchange National Bank and Continental Illinois National Bank are important lenders to all of our four communities. In addition, Colonial Bank and the Northern Trust Company are important lenders to the Northwest Side; while Chicago City Bank serves businesses on the Southwest Side.
However, in our study of these major lenders, businesses on the Northwest Side in general seem to be less served by commercial credit than firms in our other areas, particularly the Southwest Side. Even when the industrial mix and size of firms is taken into account, the Southwest Side receives more loan funds per employee than any other area. However, it could be that the Northwest Side is being served by neighborhood banks, which would not have been included in our study.
We discovered that of four sources of business listings (Manufacturers' News, Harris Directory, Dun and Bradstreet, and a listing maintained by the International Business Development Program at UIC), both the Harris Directory and Dun and Bradstreet are fairly comprehensive. Taken together, these two sources provided over 98 percent of the firms in our final list.