Have Banks Caught Corona? Effects of COVID on Lending in the U.S.

64 Pages Posted: 17 Jan 2021 Last revised: 11 Oct 2021

See all articles by Thorsten Beck

Thorsten Beck

City University London - Sir John Cass Business School; European University Institute; Centre for Economic Policy Research (CEPR)

Jan Keil

Humboldt University of Berlin

Multiple version iconThere are 2 versions of this paper

Date Written: September 24, 2020

Abstract

Exploiting spatial and time variation, we find that banks geographically more exposed to lockdown measures experience an increase in loss provisions and non-performing loans. Exposures to the pandemic itself have a similar, but slightly weaker effect. We observe an increase in small business lending driven by government-guaranteed loans which seem to replace regular loans. Interestingly, lenders more exposed to lockdown measures rely more on government-guaranteed loans – even when controlling for borrower exposure. 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. These findings point to a negative impact of the pandemic on the supply side of finance, to previously unknown side effects of government support, and to the critical role of banks in channeling government support measures to small firms.

Keywords: COVID-19, banking

JEL Classification: G21

Suggested Citation

Beck, Thorsten and Keil, Jan, Have Banks Caught Corona? Effects of COVID on Lending in the U.S. (September 24, 2020). Available at SSRN: https://ssrn.com/abstract=3766831 or http://dx.doi.org/10.2139/ssrn.3766831

Thorsten Beck

City University London - Sir John Cass Business School ( email )

106 Bunhill Row
London, EC1Y 8TZ
United Kingdom

European University Institute

Villa Schifanoia
133 via Bocaccio
Firenze (Florence), Tuscany 50014
Italy

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Jan Keil (Contact Author)

Humboldt University of Berlin ( email )

Dorotheenstrasse 1
Berlin, 10099
Germany

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

Do you want regular updates from SSRN on Twitter?

Paper statistics

Downloads
533
Abstract Views
2,220
rank
72,505
PlumX Metrics