Abstract
We examine the broader economic effects of the Federal government's Paycheck Protection Program (PPP) by focusing on the performance of securitized commercial mortgages following the coronavirus (COVID-19) pandemic. We provide novel evidence along the extensive and intensive margins for spillover effects from government interventions in the face of economic crises. We find that the PPP reduced mortgage delinquencies, especially in the retail sector. The strongest effects occur when PPP funds targeted businesses in areas most affected by COVID-19 and where banks overperformed in providing PPP loans. Thus, PPP relief to small businesses eased economic distress beyond the labor market.
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