The effect of the Federal Reserve’s lending facility on PPP lending by commercial banks

Sriya Anbil, Mark Carlson and Mary-Frances Styczynski

Journal of Financial Intermediation, 2023, vol. 55, issue C

Abstract: We investigate whether the Federal Reserve’s Paycheck Protection Program Liquidity Facility (PPPLF) boosted commercial bank Paycheck Protection Program (PPP) lending. To determine whether this facility had a causal effect, we use pre-existing familiarity with the Federal Reserve’s discount window as an instrumental variable. We show that the PPPLF materially bolstered bank PPP lending and provided a meaningful funding backstop for banks that did not use the facility. Our paper is one of the first to quantitatively illustrate the effectiveness of a central bank facility as a funding backstop.

Keywords: Central bank lending; PPP lending; Federal Reserve; COVID (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jfinin:v:55:y:2023:i:c:s1042957323000256

DOI: 10.1016/j.jfi.2023.101042

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