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Did the Paycheck Protection Program Help Small Businesses? Evidence from Commercial Mortgage-Backed Securities
Did the Paycheck Protection Program Help Small Businesses? Evidence from Commercial Mortgage-Backed Securities
Sumit Agarwal
Brent W. Ambrose
Luis A. Lopez
Xue Xiao
American Economic Journal: Economic Policy (Forthcoming)
Abstract
In this study, we examine the broader economic effects of the
U.S. federal government’s Paycheck Protection Program (PPP)
by focusing on the performance of securitized commercial mortgages.
We provide novel evidence for spillover effects of government
interventions in the face of economic crises. We find that
the PPP reduced mortgage delinquencies by approximately $36 billion
in 2020. The strongest effects occur when PPP funds targeted
businesses in areas most affected by COVID-19, where banks overperformed
in providing PPP loans, and among mortgages on properties
in retail and lodging. Thus, PPP relief to small businesses
eased economic distress beyond the labor market.
