Racial disparities in the Paycheck Protection Program

Sergey Chernenko and David Scharfstein

Journal of Financial Economics, 2024, vol. 160, issue C

Abstract: Consistent with contemporaneous research, we document that minority-owned firms were more likely than observationally similar white-owned firms to receive PPP loans from nonbank lenders than from banks. However, we show that this substitution to nonbanks was only partial, resulting in significantly lower PPP take-up by minority-owned firms, particularly Black-owned ones. Location and firm characteristics explain about two-thirds of the 25 percentage point disparity in PPP take-up by Black-owned firms. While there was greater substitution to nonbanks in more racially biased locations, overall take-up was still lower in those locations. Access to professional help with applications facilitated use of nonbanks and mitigated disparities.

Keywords: Discrimination; Paycheck Protection Program; Economic Injury Disaster Loans; Bank lending; Nonbank lending (search for similar items in EconPapers)
Date: 2024
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jfinec:v:160:y:2024:i:c:s0304405x2400134x

DOI: 10.1016/j.jfineco.2024.103911

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