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The effect of the Federal Reserve’s lending facility on PPP lending by commercial banks

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  • Anbil, Sriya
  • Carlson, Mark
  • Styczynski, Mary-Frances

Abstract

We investigate whether the Federal Reserve’s Paycheck Protection Program Liquidity Facility (PPPLF) boosted commercial bank Paycheck Protection Program (PPP) lending. To determine whether this facility had a causal effect, we use pre-existing familiarity with the Federal Reserve’s discount window as an instrumental variable. We show that the PPPLF materially bolstered bank PPP lending and provided a meaningful funding backstop for banks that did not use the facility. Our paper is one of the first to quantitatively illustrate the effectiveness of a central bank facility as a funding backstop.

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  • Anbil, Sriya & Carlson, Mark & Styczynski, Mary-Frances, 2023. "The effect of the Federal Reserve’s lending facility on PPP lending by commercial banks," Journal of Financial Intermediation, Elsevier, vol. 55(C).
    • Handle: RePEc:eee:jfinin:v:55:y:2023:i:c:s1042957323000256
    DOI: 10.1016/j.jfi.2023.101042
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    References listed on IDEAS

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    Cited by:

    1. Stefano Filomeni, 2024. "The impact of the Paycheck Protection Program on the risk-taking behaviour of US banks," Review of Quantitative Finance and Accounting, Springer, vol. 62(4), pages 1329-1353, May.

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