Founding a Community Bank for Excluded Populations in Israel
Promoting Community Development for Excluded Populations
The poorest and weakest populations in Israel are economically excluded and suffer from a lack of accessibility to capital and bank credit. Nonetheless, credit for people, households, and small businesses is crucial for creating a basis for sustainable lenders and communities. Weak and vulnerable populations that have a minimal standard of living will not be able to rise above it through sheer will—they require new approaches and innovations, experiments, and cooperation.
This project aims to create a strategy for establishing a “community bank”, which is a new financial institution that will enable promoting community development for excluded populations that, at this point, do not have services or whose accessibility to services was insufficient. One of the tools used by the project is the “financial innovation laboratory”.
Such a laboratory was conducted in 2014 with the participation of over 50 policymakers, regulators, and community and business representatives. On the basis of its findings, cooperation was initiated with the Israel Free Loan Association (IFLA) for the purpose of establishing a new financial institution for community development, namely the Community Development Financial Institutions Fund (CDFI).
As of 2021, the Community Bank is awaiting approval from the Bank of Israel. During 2020, the State approved 320 loans to SME’s that suffered because of covid, for a total amount of 26.7 million NIS.