Hacker Read

travisoneill1 | karma 2076 | avg karma 3.83 · 2020-09-22 05:29:54+00:00

How do you have a business of any size without a banking relationship?

troydavis | karma 11035 | avg karma 5.72 · 2020-09-22 05:45:32+00:00

Rather than “bank relationship,” a clearer phrase would be “existing bank loan.” https://libertystreeteconomics.newyorkfed.org/2020/05/where-... examines this:

> For this reason, we turn to testing the hypothesis that variation in the share of small businesses with existing bank financing explains the variation of PPP loans approved across states. The top panel of the figure below shows the share of small businesses with bank financing in 2019, while the bottom panel shows the share of firms receiving PPP loans.

> We can see that there is strong similarity in shading between the top and bottom panels, consistent with the lenders’ preference explanation. This relationship is further confirmed in unreported regressions. Our interpretation is that banks’ preference for their own customers causes the PPP to favor firms with existing lending relationships.

reply