TARP Effect on Bank Lending Behaviour: Evidence from the last Financial Crisis

Stefano Puddu () and Andreas Waelchli

No 15-06, IRENE Working Papers from IRENE Institute of Economic Research

Abstract: Using a unique data set based on US commercial banks and county level loan origination for the period 2005-2010, we measure whether banks that benefited from the Troubled Asset Relief Program (TARP) increase small business loan originations. We propose an identification strategy which exploits the ownership structure of bank holding companies. We find that TARP banks provide on average 19% higher small business loan originations than NO TARP banks. The disaggregated data allows us to control for the potential demand side effects. When considering poverty and unemployment rates at a county level we show that TARP is effective only in counties suffering from unemployment. Several robustness checks confirm the main result.

Keywords: TARP; Financial Crisis; Loan provision (search for similar items in EconPapers)
JEL-codes: C23 E58 G21 G28 (search for similar items in EconPapers)
Pages: 36 pages
Date: 2015-05
New Economics Papers: this item is included in nep-ban, nep-cfn and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (19)

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Persistent link: https://EconPapers.repec.org/RePEc:irn:wpaper:15-06

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