Indirect Costs of Government Aid and Intermediary Supply Effects: Lessons From the Paycheck Protection Program

Balyuk, Tetyana; Prabhala, Nagpurnanand; Puri, Manju

doi:10.3386/w28114

Cited by 19 publications

(12 citation statements)

References 23 publications

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“…Doniger and Kay (2021) find that this 10-day delay in financing led to significant job losses in May, especially among the self-employed. Although these loans were targeted for small businesses through the Small Business Administration, the largest of the small businesses were more likely to receive PPP loans in the early stages of the program than the unincorporated self-employed, as they tend to have smaller businesses and are more likely to be nonemployers, especially among the female selfemployed (Balyuk et al, 2020;Cole, 2011;Doniger & Kay, 2021;Fairlie & Miranda, 2017;Humphries et al, 2020). Thus, differences in the social safety net may have affected the unincorporated self-employed and the incorporated self-employed differently.…”

Section: Introductionmentioning

confidence: 99%

Impacts of COVID-19 on the self-employed

Kalenkoski

Pabilonia

2021

Small Bus Econ

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Among the unincorporated self-employed, married mothers were less likely to be employed and worked fewer hours during the COVID-19 pandemic than married fathers. Effects were visible in March as voluntary social distancing began, largest in April as complete shutdowns occurred, and slightly smaller in May as some restrictions were eased. Our results suggest that COVID-19 forced selfemployed women back into the home due to gender norms about who cares for children. However, having a plausibly remote job or being in an essential industry helped mitigate some of the negative effects on employment and hours worked. Besides providing evidence that married mothers' presence among the self-employed has been diminished by COVID-19, we find that the pandemic hurt the unincorporated self-employed more than other types of workers. This finding provides further evidence that it is important for researchers to distinguish between the incorporated and unincorporated self-employed when analyzing variation in self-employment at different points in the business cycle.

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Section: Introductionmentioning

confidence: 99%

Impacts of COVID-19 on the self-employed

Kalenkoski

Pabilonia

2021

Small Bus Econ

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“…Erel and Liebersohn (2020) find that borrowers in areas with fewer bank branches, lower incomes, and more minority population are more likely to access PPP via FinTech firms rather than banks. A number of studies show that small, community banks provide an outsized share of PPP loans (Balyuk (2020), Faulkender et al (2020, James et al (2020)). Bartik et al (2020) use firm survey evidence, finding that firms with strong bank relationship are more likely to receive PPP loans, while Joaquim and Netto (2020) provide a theoretical analysis of bank incentives to lend under the program.…”

Section: Introductionmentioning

confidence: 99%

Who Supplies PPP Loans (and Does It Matter)? Banks, Relationships, and the COVID Crisis

Strahan²

2021

J. Financ. Quant. Anal.

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“…These two findings are consistent with banks' financial reporting incentives explaining the extent to which loan prioritization occurred. Size is positively associated with the prioritization of large loans, indicating that larger banks favored large loans (Balyuk et al. , 2020).…”

Section: Resultsmentioning

confidence: 99%

“…, 2017; Meisel, 2007; Owens and Wu, 2015), we include profitability (net income divided by total assets) and capitalization (leverage ratio for commercial banks and net worth ratio for credit unions) to test whether financial institutions with greater financial reporting incentives affected loan prioritization. We further control for financial institution size (Log(Assets)) and asset growth (AssetGrowth), as large banks prioritized large borrowers (Balyuk et al. , 2020).…”

Section: Research Design and Sample Selectionmentioning

confidence: 99%

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Lender financial reporting incentives and loan prioritization during the Paycheck Protection Program

Bailey

Sokolowski

2022

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PurposeThis study contributes to a growing body of literature on the Paycheck Protection Program (PPP) by examining how lender incentives affected prioritization of large borrowers. In addition, this study separately examines incentives for commercial banks and credit unions during the program.Design/methodology/approachUsing 2020 PPP loan data, the authors create a proxy for lender loan prioritization by comparing the skewness statistics of large and small loan distributions. A regression model is used to examine lender reporting incentives and loan prioritization.FindingsResults show that larger borrowers were prioritized in receiving PPP loans earlier. Lenders with financial reporting concerns and commercial banks favored large borrowers to a greater extent.Practical implicationsThis study may inform social planners and regulators about the benefits and costs of delegating emergency funding loan decisions to financial institutions.Originality/valueThe authors believe this paper is the first to examine financial institution reporting incentives in relationship to PPP lending practices. It adds novelty by examining lender incentives, while prior research has focused heavily on the economic consequences of the program and how borrower–lender relationships affected loan practices during the program.

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Indirect Costs of Government Aid and Intermediary Supply Effects: Lessons From the Paycheck Protection Program

Cited by 19 publications

References 23 publications

Impacts of COVID-19 on the self-employed

Impacts of COVID-19 on the self-employed

Who Supplies PPP Loans (and Does It Matter)? Banks, Relationships, and the COVID Crisis

Lender financial reporting incentives and loan prioritization during the Paycheck Protection Program

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