Kyle Allen: Community banks were essential in keeping small businesses open at the onset of COVID-19.
Kyle Allen, assistant professor, Department of Finance
Paper title: “Further evidence on the effectiveness of community banks in the Paycheck Protection Program”
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We analyze the Paycheck Protection Program (PPP) for small business lending of loans of $150,000 or less. Specifically, how did loans get funded during the critical first week of availability? We find that during the first week of available PPP loans, community banks issued nearly three times as many loans as large non-community banks, companies in nonmetro areas were more likely to borrow during the first week, and the effect is largely driven by community bank lending. Using Google mobility data, we show nonmetro borrowing increases with a reduction in geographic mobility.
Read “Further evidence on the effectiveness of community banks in the Paycheck Protection Program”