Time is money: Real effects of relationship lending in a crisis

Christopher James, Jing Lu and Yangfan Sun

Journal of Banking & Finance, 2021, vol. 133, issue C

Abstract: We provide evidence that small banks responded faster to Paycheck Protection Program (PPP) loan requests and lent more intensively to small businesses than larger banks. Using community bank pre-pandemic share of deposits/assets as an instrument for the intensity of PPP lending, we find a negative and significant relationship between county level bankruptcy filings and PPP lending per small business. Overall, our findings suggest that community banks remain an important conduit for small business credit particularly during crises when a rapid response is required.

Keywords: Community bank; Small business; Lending; SBA Lending (search for similar items in EconPapers)
JEL-codes: G21 H81 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jbfina:v:133:y:2021:i:c:s0378426621002399

DOI: 10.1016/j.jbankfin.2021.106283

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