Did the Paycheck Protection Program Help Small Businesses? Evidence from Commercial Mortgage-backed Securities

75 Pages Posted: 16 Aug 2020 Last revised: 13 Dec 2022

See all articles by Sumit Agarwal

Sumit Agarwal

National University of Singapore

Brent W. Ambrose

Pennsylvania State University - Department of Insurance & Real Estate

Luis A. Lopez

University of Illinois at Chicago

Xue Xiao

Virginia Tech - Pamplin College of Business

Date Written: September 4, 2022

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.

Keywords: COVID-19, CARES Act, Paycheck Protection Program, Mortgages

JEL Classification: G21, G28, R51, I18

Suggested Citation

Agarwal, Sumit and Ambrose, Brent W. and Lopez, Luis A. and Xiao, Xue, Did the Paycheck Protection Program Help Small Businesses? Evidence from Commercial Mortgage-backed Securities (September 4, 2022). Available at SSRN: https://ssrn.com/abstract=3674960 or http://dx.doi.org/10.2139/ssrn.3674960

Sumit Agarwal

National University of Singapore ( email )

15 Kent Ridge Drive
Singapore, 117592
Singapore
8118 9025 (Phone)

HOME PAGE: http://www.ushakrisna.com

Brent W. Ambrose

Pennsylvania State University - Department of Insurance & Real Estate ( email )

Smeal College of Business,
Penn State University
University Park, PA US-0-PA 16802
United States
8148670066 (Phone)

HOME PAGE: http://https://sites.psu.edu/brentwambrose/

Luis A. Lopez (Contact Author)

University of Illinois at Chicago ( email )

1200 W Harrison St
Chicago, IL 60607
United States

Xue Xiao

Virginia Tech - Pamplin College of Business ( email )

1016 Pamplin Hall
Blacksburg, VA 24061
United States

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