Paycheck protection facility supported lending – Fed paper
Study finds liquidity facility helped banks lend more to small businesses during the Covid-19 crisis
The Federal Reserve’s Paycheck Protection Program Liquidity Facility (PPPLF) appears to have been successful in encouraging banks to lend more to small businesses during the Covid-19 crisis, new research finds.
Sriya Anbil, Mark Carlson, and Mary-Frances Styczynski use an instrumental variables approach to isolate the effects of the PPPLF. Their instrument is the familiarity of banks with the Fed’s discount window, based on a bank’s history of pledging collateral.
Because the process was
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