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Racial disparities in the Paycheck Protection Program

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  • Chernenko, Sergey
  • Scharfstein, David

Abstract

Consistent with contemporaneous research, we document that minority-owned firms were more likely than observationally similar white-owned firms to receive PPP loans from nonbank lenders than from banks. However, we show that this substitution to nonbanks was only partial, resulting in significantly lower PPP take-up by minority-owned firms, particularly Black-owned ones. Location and firm characteristics explain about two-thirds of the 25 percentage point disparity in PPP take-up by Black-owned firms. While there was greater substitution to nonbanks in more racially biased locations, overall take-up was still lower in those locations. Access to professional help with applications facilitated use of nonbanks and mitigated disparities.

Suggested Citation

  • Chernenko, Sergey & Scharfstein, David, 2024. "Racial disparities in the Paycheck Protection Program," Journal of Financial Economics, Elsevier, vol. 160(C).
    • Handle: RePEc:eee:jfinec:v:160:y:2024:i:c:s0304405x2400134x
    DOI: 10.1016/j.jfineco.2024.103911
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    References listed on IDEAS

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    Cited by:

    1. William M. Doerner & Scott Susin, 2024. "Underappraisal Disparities and Time Adjustments to Comparable Sales Prices in Mortgage Appraisals," FHFA Staff Working Papers 24-07, Federal Housing Finance Agency.

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