Reshaping the Local Marketplace: Financing, Independent Businesses, Large Firms, and COVID

58 Pages Posted: 23 Feb 2021 Last revised: 25 Feb 2021

See all articles by Vojislav Maksimovic

Vojislav Maksimovic

University of Maryland - Robert H. Smith School of Business

Liu Yang

University of Maryland, Robert H. Smith School of Business

Date Written: February 22, 2021

Abstract

We use granular high-frequency data to precisely estimate the effect of COVID demand shocks, bank branches, PPP, and neighborhood peers within 200 yards of retail pharmacies. Neighborhood banks softened the immediate shock for independent pharmacies, but the effect is small. PPP has a larger economic effect, significantly driven by peer effects. If neighborhood stores obtain PPP, whether locally or from out-of-state intermediaries, the store's probability of PPP uptake increases. The COVID shock has accelerated the decline of independent pharmacies, increasing the HHI in local markets by an economically significant 8%, which neither the PPP nor access to local banks prevents.

Keywords: Small Businesses, Local Banks, PPP, Peer Effects, Brands, Concentration, COVID

JEL Classification: G32, G21, L11

Suggested Citation

Maksimovic, Vojislav and Yang, Liu A., Reshaping the Local Marketplace: Financing, Independent Businesses, Large Firms, and COVID (February 22, 2021). Available at SSRN: https://ssrn.com/abstract=3790999 or http://dx.doi.org/10.2139/ssrn.3790999

Vojislav Maksimovic

University of Maryland - Robert H. Smith School of Business ( email )

Van Munching Hall
College Park, MD 20742-1815
United States
301-405-2125 (Phone)
301-314-9157 (Fax)

HOME PAGE: http://scholar.rhsmith.umd.edu/vmax/home

Liu A. Yang (Contact Author)

University of Maryland, Robert H. Smith School of Business ( email )

4420 Van Munching Hall
Robert.H.Smith School of Business
College Park, MD 20742
United States
3014058794 (Phone)

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