The Relevance of Relationship Lending in Times of Crisis

Amiram, Dan; Rabetti, Daniel

doi:10.2139/ssrn.3701587

Cited by 28 publications

(14 citation statements)

References 40 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…First, initial demand for loans significantly exceeded the ability of banks to deliver them. In the face of these capacity constraints, banks appear to have prioritized firms with which they had a pre-existing relationship (Amiram and Rabetti, 2020;Cororaton and Rosen, 2021;Joaquim and Netto, 2021;Granja et al, 2020;Li and Strahan, 2020). Larger firms, which tend to have ongoing banking relationships, accessed PPP funds sooner than smaller firms on average.…”

Section: Timelinessmentioning

confidence: 99%

The $800 Billion Paycheck Protection Program: Where Did the Money Go and Why Did it Go There?

Autor¹,

Cho²,

Crane³

et al. 2022

View full text Add to dashboard Cite

for helpful discussion. Autor acknowledges financial support from the Smith Richardson Foundation (#20202252), Accenture LLP (#027843-0001), the Andrew Carnegie Fellowship (G-F-19-56882), and the Washington Center for Equitable Growth (APP-01666). The analysis and conclusions set forth here are those of the authors and do not indicate concurrence by other members of the Federal Reserve Board research staff, by the Board of Governors, or by ADP. ADP's data privacy policy can be found at https://www.adp.com/aboutadp/data-privacy.aspx. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.NBER working papers are circulated for discussion and comment purposes. They have not been peer-reviewed or been subject to the review by the NBER Board of Directors that accompanies official NBER publications.

show abstract

Section: Timelinessmentioning

confidence: 99%

The $800 Billion Paycheck Protection Program: Where Did the Money Go and Why Did it Go There?

Autor¹,

Cho²,

Crane³

et al. 2022

View full text Add to dashboard Cite

show abstract

“…Additionally, the existing relationships lower the cost of the transaction. Amiram and Rabetti ( 2020 ) show that borrowers benefitted from relationship lending when applying for PPP loans. Firms with existing lending relationships received larger PPP loan amounts and faster approvals.…”

Section: Prior Literature and Hypothesis Developmentmentioning

confidence: 99%

Discrimination in lending? Evidence from the Paycheck Protection Program

2021

View full text Add to dashboard Cite

We assess the role of race in loans made through the Paycheck Protection Program (PPP). The PPP program, created by the U.S. government as a response to the Covid-19 pandemic, provides loans to small businesses so they can keep employees on their payroll. We argue that the historical record and PPP program design choices made it likely that many Black-owned businesses received smaller PPP loans than White-owned businesses. Using newly released data on the PPP program, we find that Black-owned businesses received loans that were approximately 50% lower than observationally similar White-owned businesses. The effect is marginally smaller in areas with more bank competition and disappeared over time as changes to the PPP program were implemented allowing for entry by fintechs and other non-traditional lenders. Plain English Summary We find that Black-owned businesses received loans through the Paycheck Protection Program that were approximately 50 percent lower than White-owned businesses with similar characteristics. However, this difference in loan size shrank over time as more non-bank lenders such as fintechs were allowed to participate in the program and began approving PPP loans. Loan size differences were also slightly smaller in zip codes containing a larger number of bank branches. These results are consistent with prior research which shows lending discrimination by commercial banks against Black borrowers. It is also consistent with studies showing that greater access to and competition among banks and other lenders can reduce discrimination. In light of these results we recommend that policy makers account for existing racial inequalities within banking or other systems in their program design to produce more equitable outcomes.

show abstract

“…Several recent articles have argued that bank relationships have helped firms gain access to PPP loans. Amiram and Rabetti (2020) focus on publicly traded firms and find that firms with existing banking relationships receive larger PPP loans faster. Balyuk, Prabhala, and Puri (2020) study small public firms and find benefits associated with access to PPP credit.…”

Section: Graph C Share Of Small Bank Branches By Statementioning

confidence: 99%

“…However, several recent papers have argued that bank relationships have helped firms gain access to PPP loans. Amiram and Rabetti (2020) focus on publicly traded firms and find that firms with existing banking relationship received larger PPP loans faster. Cororaton and Rosen (2020) also study publicly traded firms and find that smaller public firms with more employees, fewer investment opportunities, and COVID-19 exposure are more likely to borrow from PPP.…”

Section: Introductionmentioning

confidence: 99%