The Politics of the Paycheck Protection Program

Deniz Igan, Thomas Lambert, Prachi Mishra and Eden Quxian Zhang

The Review of Corporate Finance Studies, 2025, vol. 14, issue 4, 1083-1122

Abstract: Does partisanship influence loan allocation through the Paycheck Protection Program (PPP)? We examine the 2020 Presidential campaign contributions made by lenders’ employees as a partisanship measure and leverage the PPP’s phased implementation under both the Trump and the Biden administrations. We find that partisan misalignment increases lending, particularly to small and first-time PPP borrowers, as well as those in Republican areas. Misalignment is also associated with higher payroll coverage for small businesses. Our findings are consistent with Republican-leaning lenders viewing the PPP’s 2021 phase as a legacy policy of the prior administration, shedding new light on the partisan-alignment phenomenon in finance. (JEL D72, G21, G28, G32, G38, H12, H81)

Date: 2025
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