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A Helping Hand to Main Street Where and When It Was Needed

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Abstract

This paper investigates the lending activity of the Main Street Lending Program, which the Federal Reserve established at the onset of the COVID-19 pandemic in spring 2020. Main Street was the largest (by total principal outstanding) of the Federal Reserve's emergency credit and liquidity facilities. The authors find fairly robust evidence that Main Street accomplished its key goal of directing more funds where and when they were most needed. Businesses located in states with more severe declines in commercial activity (as proxied by mobility indicators) and higher infection rates obtained a higher volume of loans from Main Street. Furthermore, the timing of the loans tended to coincide with the need: More loans were applied for and approved when a state experienced an increase in its state-wide infection rate.

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  • Falk Bräuning & José Fillat & Frankie Lin & J. Christina Wang, 2021. "A Helping Hand to Main Street Where and When It Was Needed," Current Policy Perspectives 92116, Federal Reserve Bank of Boston.
    • Handle: RePEc:fip:fedbcq:92116
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    Cited by:

    1. Joshua Ballance & Melanie Qing & J. Christina Wang, 2021. "How Did the MSLP Borrowers Fare Before and During COVID-19?," Current Policy Perspectives 93055, Federal Reserve Bank of Boston.
    2. Camelia Minoiu & Rebecca Zarutskie & Andrei Zlate, 2021. "Motivating Banks to Lend? Credit Spillover Effects of the Main Street Lending Program," Finance and Economics Discussion Series 2021-078, Board of Governors of the Federal Reserve System (U.S.).

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