Peter Grajzl Presents Research at the Oweesta Native CDFI Capital Access Convening The John F. Hendon Professor of Economics shared research he jointly conducted with the Federal Reserve Bank of Minneapolis’ Center for Indian Country Development.

By Brian Laubscher
June 3, 2025

Peter Grajzl, John F. Hendon Professor of Economics at Washington and Lee University, recently presented research on Native Community Development Financial Institutions (NCDFIs) during a plenary session at the 10th Annual Oweesta Native CDFI Capital Access Convening held May 13-15 in Waikoloa, Hawaii.

Grajzl, a non-resident visiting scholar with the Federal Reserve Bank of Minneapolis, has been jointly researching the NCDFI industry with the Fed’s Center for Indian Country Development.

NCDFIs provide loans, other financial products and technical assistance (including financial education) specifically to Native American communities that face unique socioeconomic challenges. NCDFIs help reduce credit barriers in markets traditionally neglected by mainstream financial intermediaries. By creating opportunities for individuals and businesses, NCDFIs catalyze developing local economies in Indian Country and strengthen Native American communities. There are currently 69 certified NCDFIs operating in 27 states across the U.S.

“Our recent empirical research on NCDFIs has focused on two major areas,” said Grajzl. “The first is NCDFI lending practices, specifically how these organizations, on the one hand, address context-specific problems of asymmetric information and, at the same time, foster financial inclusion in Native communities.”

“The second stream of our research, which is what we presented at Oweesta’s Capital Access Convening in Hawaii, focuses on empirically characterizing the main features of the U.S. NCDFI industry as a whole,” he continued. “We developed and administered the largest-ever survey of NCDFIs, and our research uncovered key industry practices that reflect the distinctive concerns and cultures of the Native communities served by these organizations.”

In the presentation, Grajzl and his collaborators highlighted the diversity of the NCDFI industry in terms of age, size and geography, as well as strategic goals, risk assessment practices and perceived challenges and opportunities. Using an inductive, data-driven approach, the research team identified four distinct NCDFI profiles and compared them based on product offerings, development services and organizational practices. This analysis revealed both fundamental differences and important commonalities among organizations that play a crucial role in expanding access to credit, fostering entrepreneurship and improving housing in Native communities.

“Oweesta’s Capital Access Convening event was both impressive and uplifting. NCDFI leaders and staff possess a tremendous depth of knowledge about the intricacies of financial economics as applied to a non-standard setting in which conventional approaches to loan underwriting and servicing underperform,” said Grajzl. “At the same time, the NCDFI industry is permeated by a vibrant, entrepreneurial and mission-driven spirit, coupled with deep dedication to Native cultures and community development. For me, as an immigrant, the experience was a powerful reminder of the importance and value of understanding and honoring one’s roots.”

In a recent paper forthcoming in the Journal of Financial Services Research, Grajzl and his co-authors investigate fine-grained business loan data from one prominent NCDFI, a nonprofit loan fund. They demonstrate that NCDFI-generated, soft information-based measures of borrower risk — such as the organization’s proprietary “character score” — help explain the NCDFI’s loan performance and pricing above and beyond the effect of the credit score, a conventional, credit-bureau-produced, hard information-based metric. Their findings support the unique and innovative loan underwriting process used in the NCDFI industry.

Grajzl has been a member of the economics faculty at W&L since 2009. He holds a bachelor’s degree in economics from the University of Ljubljana (Slovenia) and a doctorate in economics from the University of Maryland at College Park.

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