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Business Credit Programs in the Pandemic Era

Author

Listed:
  • Samuel G. Hanson

    (Harvard Business School)

  • Jeremy C. Stein

    (Harvard University)

  • Adi Sunderam

    (Harvard Business School)

  • Eric Zwick

    (University of Chicago Booth School of Business)

Abstract

We develop a pair of models that speak to the goals and design of the sort of business lending and corporate bond purchase programs that have been introduced by governments in response to the ongoing COVID-19 pandemic. An overarching theme is that, in contrast to the classic lender-oflast-resort thinking that underpinned much of the response to the 2007-2009 global financial crisis, an effective policy response to the pandemic will require the government to accept the prospect of significant losses on credit extended to private sector firms.

Suggested Citation

  • Samuel G. Hanson & Jeremy C. Stein & Adi Sunderam & Eric Zwick, 2020. "Business Credit Programs in the Pandemic Era," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 51(3 (Fall)), pages 3-60.
    • Handle: RePEc:bin:bpeajo:v:51:y:2020:i:2020-03:p:3-60
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    File URL: https://www.brookings.edu/articles/business-credit-programs-in-the-pandemic-era/
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    Citations

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    Cited by:

    1. Segura, Anatoli & Villacorta, Alonso, 2023. "Firm-bank linkages and optimal policies after a rare disaster," Journal of Financial Economics, Elsevier, vol. 149(2), pages 296-322.
    2. Gilchrist, Simon & Wei, Bin & Yue, Vivian Z. & Zakrajšek, Egon, 2024. "The Fed takes on corporate credit risk: An analysis of the efficacy of the SMCCF," Journal of Monetary Economics, Elsevier, vol. 146(C).
    3. Wang, Shuguang & Hou, Qiqi, 2023. "Corporate strategy aggressiveness and bond credit spreads," Finance Research Letters, Elsevier, vol. 56(C).

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