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Bank Relationships and the Geography of PPP Lending

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  • David Glancy

    (Federal Reserve Board of Governors)

Abstract

I study how bank relationships affected the timing and geographic distribution of Paycheck Protection Program (PPP) lending. Half of banks’ PPP loans went to borrowers within two miles of a branch, mostly driven by relationship lending. Firms near less active lenders shifted to fintechs and other distant lenders, resulting in delays receiving credit but only slightly lower loan volumes. I estimate a structural model to fit the observed relationship between branch distance, bank PPP activity, and origination timing. I find that banks served relationship borrowers five to nine days before other borrowers, an effect in line with reduced-form estimates using a sample of PPP borrowers with previous SBA lending relationships.

Suggested Citation

  • David Glancy, 2025. "Bank Relationships and the Geography of PPP Lending," Journal of Financial Services Research, Springer;Western Finance Association, vol. 67(3), pages 157-186, June.
    • Handle: RePEc:kap:jfsres:v:67:y:2025:i:3:d:10.1007_s10693-024-00432-y
    DOI: 10.1007/s10693-024-00432-y
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    References listed on IDEAS

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    More about this item

    Keywords

    Paycheck Protection Program (PPP); Relationship lending; COVID-19; Bank lending;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • G01 - Financial Economics - - General - - - Financial Crises
    • H81 - Public Economics - - Miscellaneous Issues - - - Governmental Loans; Loan Guarantees; Credits; Grants; Bailouts

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