Are Banks Catching Corona? Effects of COVID on Lending in the U.S.
60 Pages Posted: 17 Jan 2021 Last revised: 24 Feb 2021
Date Written: September 24, 2020
Exploiting geographic variation in the exposure of U.S. banks to COVID-19 and lockdown policies we find that banks more exposed to pandemic and lockdown policies show an increase in loss provisions and non-performing loans. While we observe an increase in corporate, especially small business, lending growth, this is driven by government-guaranteed loans. Finally, we observe a reduction in the number and average amount of syndicated loans for banks more affected by the pandemic as well as an increase in interest spreads and decrease in maturities. These findings point to a negative impact of the pandemic and swift reactions by banks.
Keywords: COVID-19, banking
JEL Classification: G21
Suggested Citation: Suggested Citation