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We associate to each row-finite directed graph E a universal Cuntz-Krieger C∗-algebra C∗(E), and study how the distribution of loops in E affects the structure of C∗(E). We prove that C∗(E) is AF if and only if E has no loops. We describe an exit condition (L) on loops in E under which allows us to prove an analogue the Cuntz-Krieger uniqueness theorem and give a characterisation of when C∗(E) is purely infinite. If the graph E satisfies (L) and is cofinal, then we have a dichotomy: if E has no loops, then C∗(E) is AF; if E has a loop, then C∗(E) is purely infinite. If A is an n × n {0, 1}-matrix, a Cuntz-Krieger A-family consists of n partial isometries Si on Hilbert space satisfying S∗i Si = n∑ j=1 A(i, j)Sj