Persistent Effects of the Paycheck Protection Program and the PPPLF on Small Business Lending

Lora Dufresne and Mark Spiegel

No 2024-26, Working Paper Series from Federal Reserve Bank of San Francisco

Abstract: Using bank-level U.S. Call Report data, we examine the longer-term effects of the Paycheck Protection Program (PPP) and the PPP Liquidity Facility on small business (SME) lending. Our sample runs through the end of 2023H1, by which time almost all PPP loans were forgiven or repaid. To identify a causal impact of program participation, we instrument based on historical bank relationships with the Small Business Administration and the Federal Reserve discount window prior to the onset of the pandemic. Elevated bank participation in both programs was positively associated with a substantial cumulative increase in small business lending growth. However, we find a negative impact of both programs during the final year of our sample, suggesting that the increase may not prove permanent. Our results are driven by the small and medium-sized banks in our sample, which are not stress-tested and hence not included in Y-14 banking data, illustrating the importance of considering small and medium-sized banks in evaluating the performance of SME lending programs.

Keywords: PPP; PPPLF; small business; bank lending; relationship lending (search for similar items in EconPapers)
JEL-codes: E58 E63 G14 G18 G32 (search for similar items in EconPapers)
Pages: 39
Date: 2024-08-07
New Economics Papers: this item is included in nep-cfn and nep-ent
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.frbsf.org/wp-content/uploads/wp2024-26.pdf Full text - article PDF (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:fip:fedfwp:98688

Ordering information: This working paper can be ordered from

DOI: 10.24148/wp2024-26

Access Statistics for this paper

More papers in Working Paper Series from Federal Reserve Bank of San Francisco Contact information at EDIRC.
Bibliographic data for series maintained by Federal Reserve Bank of San Francisco Research Library ().