Online Appendix: Small Business Lending under the PPP and PPPLF Programs (Lopez and Spiegel, December 5, 2022)
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An online appendix for the paper Small Business Lending Under the PPP and PPPLF COVID-Related Government Programs by Jose A. Lopez and Mark M. Spiegel of the Federal Reserve Bank of San Francisco, dated December 5, 2022. The appendix contains supplementary material, starting with a section titled Robustness checks that reports full results for the robustness checks reported in the main text. Table 1 summarizes coefficient point estimates and standard errors for PPP and PPPLF variables across specifications, including lagged lending growth, an instrument, a tier 1 capital ratio control, different standard errors and winsorization variants. The table note states that the dependent variable is growth in small business or farm lending from 2019Q4 through 2020Q2.
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“Online Appendix: Small Business Lending under the PPP and PPPLF Programs (Lopez and Spiegel, December 5, 2022).”
Original at www.frbsf.org. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/small-business-lending-under-the-ppp-and-ppplf-programs/
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ONLINE APPENDIX FOR SMALL BUSINESS LENDING UNDER
THE PPP AND PPPLF COVID-RELATED GOVERNMENT
PROGRAMS
JOSE A. LOPEZ
MARK M. SPIEGEL
Date: December 5, 2022.
Lopez: Federal Reserve Bank of San Francisco (Jose.A.Lopez@sf.frb.org); Spiegel: Federal Re-
serve Bank of San Francisco (Mark.Spiegel@sf.frb.org). Remy Beauregard and Jack Mueller provided
excellent research assistance. The views expressed in this paper are those of the authors and do not
necessarily reflect the views of the Federal Reserve Bank of San Francisco or the Federal Reserve
System.
1
SMALL BUSINESS LENDING 2
This document contains supplementary material for the paper "Small business lend-
ing under the PPP and PPPLF programs," by Jose A. Lopez and Mark M. Spiegel.
A working paper version can be obtained at GIVE ADDRESS.
I. Robustness checks
This section reports the full results for the robustness checks reported in the text.
The first table summarizes the coefficient point estimates and estimated standard
errors for the key variables of interest, while the remaining tables in this section
report the full results of each regression with the covariates and diagnostic statistics
included. Please see table notes and descriptions in main paper for details.
SMALL BUSINESS LENDING 3
Table 1. Robustness Checks: Summary
(1) (2)
PPPR PPPLFR
PPP and PPPLF both included 1.234∗∗∗ -0.166
(13.34) (-0.99)
Lgrowth 1.214∗∗∗ 1.322∗∗∗
(80.04) (4.41)
Lgrowth OLS 0.917∗∗∗ 0.0587∗∗
(78.72) (15.95)
Lgrowth (Region) 1.234∗∗∗ 1.322∗∗∗
(15.90) (3.39)
Llevel 1.213∗∗∗ 1.321∗∗∗
(79.44) (4.48)
Llevel and Lgrowth 1.211∗∗∗ 1.328∗∗∗
(77.61) (4.53)
INDMIX inst 1.355∗∗∗ 1.583∗∗∗
(16.16) (6.52)
Tier1 risk caprat 1.215∗∗∗ 1.393∗∗∗
(96.22) (5.17)
Robust SE 1.216∗∗∗ 1.315∗∗∗
(6.95) (4.52)
Regular SE 1.216∗∗∗ 1.315∗∗∗
(7.34) (4.66)
WLS 1.153∗∗∗ -0.0886
(8.42) (-0.05)
5%-95% Wins 1.216∗∗∗ 1.315∗∗∗
(80.30) (4.36)
No winsor -2.470 -12.21
(12.80) (9.11)
1% winsor 1.569∗∗∗ 0.725∗∗∗
(0.133) (0.0682)
Truncate 2.894∗∗∗ 1.459∗∗∗
(0.542) (0.271)
Note: Summary statistics for variables of interest. Full regression results are below. Instrumental variables estimation with
standard errors in parentheses clustered by bank size unless otherwise indicated. See text for description of instruments.
Dependent variable: Growth in small business or farm lending from 2019Q4 through 2020Q2. “PPP and PPPLF both
included" runs base spec. with both PPP and PPPLF. “Lgrowth" regressions include lagged lending growth from 2019Q4
to 2020Q2 as specified, while “Llevel" adds lending in levels for 2019Q4. “INDMIX" uses the IN DM IX variable as an
instrument, as described in text. “Tier1" adds 2019Q4 value of risk-adjusted tier 1 capital ratio. “Robust SE" and “Regular
SE" refer to heteroscedasticity-robust and conventional standard errors respectively. “WLS" runs weighted least squares,
with weighting by the intensity of SME lending. “5%-95% Wins" winsorizes at the 5/95 percent level. “No winsor" is
without winsorization, “1% winsor" are 1% winsorization, and “Truncate" are truncated regressions.
SMALL BUSINESS LENDING 4
Table 2. Robustness Checks
(1) (2) (3) (4) (5) (6)
PPP and PPPLF OLS Lgrowth Lgrowth Lgrowth (Region) Lgrowth (Region)
PPP 1.234∗∗∗ 0.917∗∗∗ 1.214∗∗∗ 1.214∗∗∗
(13.34) (78.72) (80.04) (15.90)
PPPLF -0.166 0.0587∗∗ 1.322∗∗∗ 1.322∗∗∗
(-0.99) (15.95) (4.41) (3.39)
INDMIX 0.543∗∗∗ 0.665∗ 0.408∗∗ 0.777∗∗∗ 0.408∗ 0.777∗∗
(3.41) (9.12) (2.80) (9.20) (2.13) (2.96)
LIQUIDITY 0.0853 0.222 0.0909 0.714∗∗∗ 0.0909∗∗∗ 0.714∗∗∗
(0.71) (2.55) (1.54) (4.75) (3.36) (13.30)
DEPOSITS -0.161 -0.115 -0.0384 0.458∗∗ -0.0384 0.458
(-1.54) (-1.94) (-0.76) (2.99) (-0.30) (1.19)
CAPRAT 0.474∗∗∗ 0.486∗ 0.428∗∗∗ 0.937∗∗ 0.428∗∗ 0.937∗
(5.04) (9.75) (7.87) (2.62) (3.13) (2.49)
COMMITMENT -1.179∗∗ -0.566 -1.170∗∗∗ 1.116∗∗∗ -1.170∗∗∗ 1.116∗∗∗
(-3.18) (-2.05) (-5.16) (7.27) (-3.32) (3.74)
ΔDEPOSITS -0.990∗∗ -0.756∗∗ -0.429∗∗∗ 1.795∗ -0.429∗ 1.795
(-2.58) (-17.54) (-13.37) (2.42) (-2.25) (1.42)
SMALL 0.101∗∗∗ 0.0283 0.0960∗∗∗ -0.139∗∗∗ 0.0960∗∗∗ -0.139∗∗∗
(7.83) (2.21) (12.93) (-5.13) (4.08) (-4.95)
MED 0.0718∗∗∗ 0.0469∗ 0.0574∗∗∗ 0.00487 0.0574∗∗ 0.00487
(10.60) (5.43) (9.89) (0.31) (2.65) (0.27)
LGROWTH -0.0953∗∗∗ -0.0833∗∗∗ -0.0488 -0.0833 -0.0488
(-3.87) (-6.33) (-1.52) (-1.61) (-0.83)
Constant -0.0607 0.0135 -0.151∗∗∗ -0.277 -0.151 -0.277
(-0.69) (0.34) (-4.34) (-1.20) (-1.55) (-0.68)
Observations 4056 4067 4443 4061 4443 4061
Note: Dependent variable: Growth in small business or farm lending from 2019Q4 through 2020Q2. P P P
is ratio of P P P participation to small business and farm lending; P P P LF is ratio of borrowing from the
PPPLF program to PPP lending; IN DM IX is Sum(Zj ∗ sij ) in 2019; LIQU IDIT Y is total liquidity in
2019Q4; DEP OSIT S are the total deposits in 2019Q4; COM M IT M EN T are the unused commitments in
2019Q4; ∆DEP OSIT S are the change in deposits between 2019 Q4 and 2020 Q2; CAP RAT represents total
capital ratios; and SM ALL and M ED are dummy variables for small and medium sized banks, respectively.
LGROW T H is lending growth from 2019Q4 to 2020Q2. Lgrowth refers to specifications with LGROW T H
(lagged growth) added. (Region) refers to specifications with clustering by region, rather than size. Instru-
mental variables estimation with standard errors in parentheses.
SMALL BUSINESS LENDING 5
Table 2. Robustness Checks (cont.)
(6) (7) (8) (9)
Llevel Llevel Llevel and Lgrowth Llevel and Lgrowth
PPP 1.213∗∗∗ 1.211∗∗∗
(79.44) (77.61)
PPPLF 1.321∗∗∗ 1.328∗∗∗
(4.48) (4.53)
INDMIX 0.379∗∗ 0.776∗∗∗ 0.412∗∗ 0.789∗∗∗
(2.83) (10.78) (2.80) (10.37)
LIQUIDITY 0.0950 0.709∗∗∗ 0.0915 0.720∗∗∗
(1.61) (4.98) (1.55) (5.00)
DEPOSITS -0.0260 0.456∗∗ -0.0397 0.450∗∗
(-0.54) (2.88) (-0.78) (2.93)
CAPRAT 0.460∗∗∗ 0.944∗ 0.426∗∗∗ 0.918∗
(8.21) (2.54) (7.77) (2.51)
COMMITMENT -1.196∗∗∗ 1.127∗∗∗ -1.162∗∗∗ 1.145∗∗∗
(-5.32) (7.19) (-5.18) (7.27)
ΔDEPOSITS -0.412∗∗∗ 1.812∗ -0.433∗∗∗ 1.821∗
(-13.94) (2.52) (-14.38) (2.56)
SMALL 0.0921∗∗∗ -0.184∗∗∗ 0.0942∗∗∗ -0.183∗∗∗
(10.78) (-6.37) (11.20) (-6.33)
MED 0.0528∗∗∗ -0.0393∗ 0.0561∗∗∗ -0.0372∗
(7.62) (-2.08) (8.30) (-2.03)
LGROWTH -0.0831∗∗∗ -0.0466
(-6.34) (-1.42)
LLEVEL -5.28e-10 -1.50e-08∗∗∗ -4.85e-10 -1.50e-08∗∗∗
(-0.64) (3.33e-09) (-0.61) (-4.61)
Constant -0.161∗∗∗ -0.231 -0.147∗∗∗ -0.226
(-4.96) (-0.96) (-4.41) (-0.96)
Observations 4456 4061 4443 4061
Note: Dependent variable: Growth in small business or farm lending from 2019Q4
through 2020Q2. P P P is ratio of P P P participation to small business and farm
lending; P P P LF is ratio of borrowing from the PPPLF program to PPP lending;
IN DM IX is Sum(Zj ∗ sij ) in 2019; LIQU IDIT Y is total liquidity in 2019Q4;
DEP OSIT S are the total deposits in 2019Q4; COM M IT M EN T are the unused
commitments in 2019Q4; ∆DEP OSIT S are the change in deposits between 2019 Q4
and 2020 Q2; CAP RAT represents total capital ratios; and SM ALL and M ED are
dummy variables for small and medium sized banks, respectively. LLEV EL is lending
level in 2019Q4. Llevel refers to specifications with LLEV EL (lagged lending levels)
added. Llevel and Lgrowth refers to specifications with lagged levels and growth in
lending added. Instrumental variables estimation with standard errors in parentheses.
SMALL BUSINESS LENDING 6
Table 2. Robustness Checks (cont.)
(10) (11) (12) (13)
Third inst Third inst Tier1 Tier1
PPP 1.355∗∗∗ 1.215∗∗∗
(16.16) (96.22)
PPPLF 1.583∗∗∗ 1.393∗∗∗
(6.52) (5.17)
INDMIX 0.410∗∗ 0.861∗∗∗
(2.97) (7.81)
LIQUIDITY 0.0685 0.745∗∗∗ 0.0615 0.520∗∗∗
(0.96) (5.13) (1.28) (3.78)
DEPOSITS 0.0261 0.684∗∗∗ -0.102∗∗ 0.504∗∗∗
(0.38) (6.75) (-3.25) (6.91)
CAPRAT 0.563∗∗∗ 1.219∗∗∗
(7.34) (3.95)
COMMITMENT -1.530∗∗∗ 1.020∗∗∗ -1.151∗∗∗ 1.313∗∗∗
(-4.05) (5.56) (-5.30) (7.02)
ΔDEPOSITS -0.210 2.603∗∗∗ -0.408∗∗∗ 2.050∗∗
(-1.53) (4.65) (-24.50) (3.15)
SMALL 0.120∗∗∗ -0.136∗∗∗ 0.0937∗∗∗ -0.147∗∗∗
(8.13) (-6.51) (11.94) (-5.58)
MED 0.0577∗∗∗ 0.00507 0.0530∗∗∗ -0.00231
(10.04) (0.41) (8.93) (-0.16)
TIER1 0.143∗∗∗ 0.650∗∗∗
(4.80) (8.43)
Constant -0.267∗∗∗ -0.517∗∗ -0.0667∗∗∗ -0.302∗
(-3.62) (-3.15) (-4.44) (-2.34)
Observations 4456 4073 4456 4073
Note: Dependent variable: Growth in small business or farm lending from 2019Q4
through 2020Q2. P P P is ratio of P P P participation to small business and farm
lending; P P P LF is ratio of borrowing from the PPPLF program to PPP lending;
IN DM IX is Sum(Zj ∗ sij ) in 2019; LIQU IDIT Y is total liquidity in 2019Q4;
DEP OSIT S are the total deposits in 2019Q4; COM M IT M EN T are the unused
commitments in 2019Q4; ∆DEP OSIT S are the change in deposits between 2019
Q4 and 2020 Q2; CAP RAT represents total capital ratios; and SM ALL and M ED
are dummy variables for small and medium sized banks, respectively. T IER1 is
tier 1 risk-adjusted capital ratio. Third inst refers to specifications with IN DM IX
added as a third instrument rather than as an independent regressor. Tier1 refers
to specifications with tier 1 risk-adjusted capital ratios substituted for total capital
ratios. Instrumental variables estimation with standard errors in parentheses.
SMALL BUSINESS LENDING 7
Table 2. Robustness Checks (cont.)
(1) (2) (3) (4) (5) (6)
No winsor No winsor 1% winsor 1% winsor Truncate Truncate
PPP -2.470 1.569∗∗∗ 2.894∗∗∗
(12.80) (0.133) (0.542)
PPPLF -12.21 0.725∗∗∗ 1.459∗∗∗
(9.113) (0.0682) (0.271)
LIQUIDITY 1.540 -0.283 0.235∗∗∗ 0.892∗∗∗ -0.156 0.571∗∗∗
(2.440) (0.451) (0.0423) (0.126) (0.278) (0.135)
DEPOSITS -1.319∗ -12.02 -0.0832 -0.259∗∗∗ -0.512 0.730∗∗∗
(0.527) (8.792) (0.0808) (0.0138) (0.404) (0.148)
CAPRAT 3.539 -1.243 1.013∗∗∗ 0.639∗∗∗ 2.283∗∗∗ 0.922∗∗
(6.241) (3.709) (0.0687) (0.132) (0.250) (0.299)
COMMIT -0.155 -5.158 -0.140 1.349∗∗∗ -0.354 0.928∗∗∗
(1.378) (7.611) (0.0766) (0.258) (0.310) (0.134)
∆ DEPOSITS -23.10 -56.54 -0.841∗∗∗ -1.664∗∗∗ 7.266∗∗∗ 3.089∗∗∗
(45.00) (38.84) (0.154) (0.258) (1.149) (0.596)
SMALL -1.989 -2.147 0.310∗∗∗ -0.241∗∗∗ 1.219∗∗∗ -0.101∗∗∗
(6.744) (1.475) (0.0564) (0.0130) (0.277) (0.0197)
MED 0.571 0.295 0.149∗∗∗ -0.0582∗∗∗ 0.586∗∗∗ 0.0263∗
(2.837) (0.739) (0.0197) (0.00929) (0.110) (0.0107)
Constant 3.446 13.65 -0.509∗∗∗ 0.497∗∗∗ -1.604∗∗∗ -0.544∗∗
(10.21) (9.201) (0.0480) (0.0393) (0.0834) (0.202)
Observations 4719 4074 4719 4074 4719 4074
R2 . . 0.285 0.124 . .
Note: Dependent variable: Growth in small business or farm lending from 2019Q4
through 2020Q2. P P P is ratio of P P P participation to small business and farm
lending; P P P LF is ratio of borrowing from the PPPLF program to PPP lending;
IN DM IX is Sum(Zj ∗ sij ) in 2019; LIQU IDIT Y is total liquidity in 2019Q4;
DEP OSIT S are the total deposits in 2019Q4; COM M IT M EN T are the unused
commitments in 2019Q4; ∆DEP OSIT S are the change in deposits between 2019 Q4
and 2020 Q2; CAP RAT represents total capital ratios; and SM ALL and M ED are
dummy variables for small and medium sized banks, respectively. No winsor refers
to specifications witout winsorization. 1% winsor refers to specifications with 1%-
99% winsorization. Truncate refers to specifications truncated a 5% and 95% levels
rather than winsorized. Instrumental variables estimation with standard errors in
parentheses.
SMALL BUSINESS LENDING 8
Table 2. Robustness Checks (cont.)
(1) (2) (3) (4) (5) (6)
TOBIT TOBIT TOBIT TOBIT PPP 1st stg PPPLF 1st stg
COUNT 0.0803∗ 1.165∗∗∗ 0.0565∗∗∗ 1.153∗∗∗ 0.0318∗∗∗ 0.751∗∗∗
(0.0353) (0.0744) (0.000656) (0.0944) (0.000834) (0.0368)
COLLATERAL 0.150∗∗∗ 0.297∗∗∗ 0.0717∗∗ 0.268∗∗ 0.0347 0.144∗
(0.0363) (0.0545) (0.0250) (0.0821) (0.0294) (0.0570)
SBA2019 0.573∗∗∗ 1.516∗∗∗ 0.613∗∗∗ 1.534∗∗∗ 0.252∗∗ -0.486∗∗
(0.0118) (0.0958) (0.0432) (0.118) (0.0807) (0.160)
SMALL -0.287∗∗∗ -0.0544 -0.193∗∗∗ -0.0393
(0.0176) (0.0501) (0.0287) (0.0711)
MED -0.0627∗∗∗ 0.0578∗ -0.0239 -0.0125
(0.00938) (0.0293) (0.0161) (0.0339)
INDMIX 0.757∗∗∗ 3.866∗∗∗
(0.218) (0.774)
LIQUIDITY 0.162∗ -1.436∗∗∗
(0.0704) (0.0586)
DEPOSITS -0.324∗∗∗ -3.185∗∗∗
(0.0357) (0.293)
CAPRAT -0.788∗∗∗ -5.646∗∗∗
(0.0755) (1.154)
COMMITMENT 2.508∗∗∗ 2.312∗∗∗
(0.175) (0.660)
ΔDEPOSITS -1.544∗∗∗ -8.446∗∗∗
(0.0490) (0.181)
Constant 0.190∗∗∗ -2.157∗∗∗ 0.473∗∗∗ -2.106∗∗∗ 0.679∗∗∗ 1.794∗∗∗
(0.00928) (0.149) (0.0192) (0.193) (0.0362) (0.293)
Observations 4456 4073 4456 4073 4456 4073
Note: Dependent variable: Growth in small business or farm lending from 2019Q4 through
2020Q2. P P P is ratio of P P P participation to small business and farm lending; P P P LF is
ratio of borrowing from the PPPLF program to PPP lending; IN DM IX is Sum(Zj ∗ sij ) in
2019; LIQU IDIT Y is total liquidity in 2019Q4; DEP OSIT S are the total deposits in 2019Q4;
COM M IT M EN T are the unused commitments in 2019Q4; ∆DEP OSIT S are the change in
deposits between 2019 Q4 and 2020 Q2; CAP RAT represents total capital ratios; and SM ALL
and M ED are dummy variables for small and medium sized banks, respectively. TOBIT
estimation of first stage regressions for PPP and PPPLF ratios as indicated. Instrumental
variables estimation with standard errors in parentheses.
SMALL BUSINESS LENDING 9
II. Program effects on bank capital ratios
This section reports results for the movement in bank capital ratios over our sample
period. We consider both growth in the total capital ratio, CAP˙RAT , and growth
˙ RAT . The distinction is important, as
in tier 1 risk-based capital ratios, T 1CAP
additional lending under the PPP would negatively effect a bank’s measured total
capital ratio, but since the loans were guaranteed by the Treasury, they should not
harm a bank’s risk-adjusted capital ratio. Indeed, if a bank substituted lending under
the guaranteed PPP (which receives a zero risk weight) for a loan which carries some
level of risk, tier-1 capital ratios should increase with PPP participation. We also
investigate the robustness of our results to OLS estimation.
Our results are shown in Table ??. We first examine growth in banks’ total capital
ratios. Columns 1 and 2 repeat our base IV specification with the P P P and P P P LF
variables included respectively. We obtain a statistically significant negative coefficient
point estimate for both variables. Our coefficient point estimates indicate that a one
standard deviation increase in P P P is predicted to be associated with 8.1 percentage
point decrease in total capital ratio growth, while a one standard deviation increase
in P P P LF is predicted to be associated with a 6.7 percentage point decrease in total
capital ratio growth. Columns 3 and 4 repeat the specification under ordinary least
squares with clustered standard errors. Our results remain negative for both variables
of interest, but our coefficient point estimates are smaller and both of our variables
of interest are only significant at 10% confidence levels.
Columns 5 and 6 report the impact of PPP and PPPLF participation on tier-
1 risk-adjusted capital ratios, again with our base IV specification and the same
instruments. In contrast to our results for total capital ratios, these specifications yield
statistically significant negative coefficient estimates on both P P P and P P P LF . Our
point estimates indicate that a one standard deviation increase in P P P is predicted
to be associated with 26.6 percentage point increase in total capital ratio growth,
while a one standard deviation increase in P P P LF is predicted to be associated with
a 22.9 percentage point increase in tier 1 capital ratio growth.1
The discrepancy in these results are attributable to the difference in the calculation
of total and tier-1 capital ratios. As shown above, participation in both the PPP
1We also estimated the impact of PPP and PPPLF participation on tier-1 capital ratio growth.
Our IV results were robust to this perturbation, as both P P P and P P P LF continued enter signifi-
cantly positive. These results were not shown for space considerations, but are available on request
from the authors.
SMALL BUSINESS LENDING 10
Table 3. Growth in bank capital ratios
(1) (2) (3) (4) (5) (6)
Full Full SM/MED BanksSM/MED BanksLG BanksLG Banks
PPP -0.105∗∗∗ -0.100∗∗∗ -0.0226
(0.00800) (0.00503) (0.0241)
INDMIX 0.0513∗∗∗ -0.00424 0.0504∗∗∗ -0.00606 -0.0219 0.0488
(0.0106) (0.00301) (0.0124) (0.00524) (0.0700) (0.106)
LIQUIDITY 0.0100∗∗∗ -0.0353∗∗∗ 0.00939∗∗∗ -0.0378∗∗∗ 0.0694 0.111
(0.00212) (0.00461) (0.00184) (0.00132) (0.0625) (0.0647)
DEPOSITS 0.0142∗∗ 0.00451 0.0154∗∗∗ 0.0173∗∗∗ -0.0410 -0.187
(0.00532) (0.0122) (0.00369) (0.00191) (0.0346) (0.218)
CAPRAT -0.0437∗∗∗ -0.0292 -0.0378∗∗∗ -0.00955 -0.112 -0.184
(0.00981) (0.0191) (0.00416) (0.0122) (0.0729) (0.226)
COMMITMENT -0.161∗ -0.397∗∗∗ -0.208∗∗∗ -0.437∗∗∗ 0.0141 -0.00666
(0.0638) (0.0509) (0.0307) (0.0155) (0.0437) (0.0517)
ΔDEPOSITS 0.357∗∗∗ 0.297∗∗∗ 0.369∗∗∗ 0.320∗∗∗ -0.0228 -0.122
(0.0593) (0.0470) (0.0528) (0.0388) (0.0761) (0.248)
SMALL -0.0338∗∗∗ -0.0170∗∗∗ -0.0182∗∗∗ -0.00424∗∗∗
(0.00174) (0.00269) (0.000681) (0.000261)
MED -0.0156∗∗∗ -0.0137∗∗∗
(0.000961) (0.00146)
PPPLF -0.0774∗∗∗ -0.0709∗∗∗ -0.0502
(0.00686) (0.00772) (0.0888)
Constant 0.0371∗∗∗ 0.0144 0.0200∗∗∗ -0.0105∗ 0.0327 0.147
(0.00731) (0.00796) (0.00470) (0.00472) (0.0340) (0.215)
Observations 4463 4083 4336 3970 127 113
R2 0.364 0.147 0.374 0.171 0.240 .
Note: Dependent variable: Growth in small business or farm lending from 2019Q4 through
2020Q2. P P P is ratio of P P P participation to small business and farm lending; P P P LF is
ratio of borrowing from the PPPLF program to PPP lending; IN DM IX is Sum(Zj ∗ sij )
in 2019; LIQU IDIT Y is total liquidity in 2019Q4; DEP OSIT S are the total deposits in
2019Q4; COM M IT M EN T are the unused commitments in 2019Q4; ∆DEP OSIT S are the
change in deposits between 2019 Q4 and 2020 Q2; CAP RAT represents total capital ratios;
and SM ALL and M ED are dummy variables for small and medium sized banks, respectively.
Full (columns 1 and 2) refers to specifications with full sample of banks, SM/MED (columns
3 & 4) reports results for sub-sample of small and medium sized banks, LG (columns 5
& 6) reports results for sub-sample of large banks. Instrumental variables estimation with
standard errors in parentheses.
Full (columns 1 and 2) is the full sample of banks, SM/MED (columns 3 & 4) represents
the sample of small and medium sized banks, LG (columns 5 & 6) represents the sample of
large banks.
SMALL BUSINESS LENDING 11
and the PPPLF programs were associated with increased lending. This expanded
bank balance sheets and lowered total capital ratios, which one could erroneously
associate with increased bank vulnerability. However, as our risk-adjusted capital
ratio results demonstrate, such an inference would be incorrect, as the risk associated
with the increase in bank balance sheets under these programs were borne largely
by the US Treasury, not by the banks themselves. Indeed, our negative coefficients
demonstrate that despite increased lending activity, bank vulnerability was actually
lowered through greater participation in these programs on average.
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