Abstract
I use geocoded data on Paycheck Protection Program (PPP) loans to investigate the spatial distribution of PPP originations. I document three findings. First, 60% of bank loans come from banks with branches within 2 miles of the borrower. Second, borrowers using a nearby bank get credit sooner, particularly if the bank is a more active PPP participant. Third, census tracts where nearby banks are less active PPP lenders receive funding later and receive less funding overall, though increased lending from Fintechs offset much of the decline in credit. The results highlight that despite PPP loans being fully guaranteed, there were still significant frictions in substituting away from relationship lenders.
Published Version
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