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What Drove Racial Disparities in the Paycheck Protection Program?

Author

Listed:
  • Sergey V. Chernenko
  • Nathan Kaplan
  • Asani Sarkar
  • David Scharfstein

Abstract

Numerous studies of the Paycheck Protection Program (PPP), which provided loans to small businesses during the COVID-19 pandemic, have documented racial disparities in the program. Because publicly available PPP data only include information on approved loans, prior work has largely been unable to assess whether these disparities were driven by borrower application behavior or by lender approval decisions. In this post, which is based on a related Staff Report and NBER working paper, we use the Federal Reserve’s 2020 Small Business Credit Survey to examine PPP application behavior and approval decisions and to study the strengths and limitations of fintech lenders in enhancing access to credit for Black-owned businesses.

Suggested Citation

  • Sergey V. Chernenko & Nathan Kaplan & Asani Sarkar & David Scharfstein, 2023. "What Drove Racial Disparities in the Paycheck Protection Program?," Liberty Street Economics 20230601, Federal Reserve Bank of New York.
    • Handle: RePEc:fip:fednls:96273
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    File URL: https://libertystreeteconomics.newyorkfed.org/2023/06/what-drove-racial-disparities-in-the-paycheck-protection-program/
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    Citations

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    Cited by:

    1. Matteo Crosignani & Hanh Le, 2023. "Stakeholders’ Aversion to Inequality and Bank Lending to Minorities," Staff Reports 1079, Federal Reserve Bank of New York.

    More about this item

    Keywords

    discrimination; racial disparities; Paycheck Protection Program (PPP); bank lending; FinTech Lending; administrative burden; inequality;
    All these keywords.

    JEL classification:

    • G01 - Financial Economics - - General - - - Financial Crises
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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