Did the Paycheck Protection Program Help Small Businesses? Evidence from Commercial Mortgage-Backed Securities

Sumit Agarwal, Brent Ambrose, Luis A. Lopez and Xue Xiao

American Economic Journal: Economic Policy, 2024, vol. 16, issue 3, 95-132

Abstract: In this study, we examine the broader economic effects of the US federal government's Paycheck Protection Program by focusing on the performance of securitized commercial mortgages. We provide novel evidence for spillover effects of government interventions in the face of economic crises. We find that the PPP reduced mortgage delinquencies by approximately $36 billion in 2020. The strongest effects occur when PPP funds targeted businesses in areas most affected by COVID-19, where banks overperformed in providing PPP loans, and among mortgages on properties in retail and lodging. Thus, PPP relief to small businesses eased economic distress beyond the labor market.

JEL-codes: G21 G28 I12 I18 L25 R33 (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1257/pol.20220181

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