Working Paper: CEPR ID: DP15869
Authors: Thorsten Beck; Jan Keil
Abstract: Exploiting geographic variation in the exposure of U.S. banks to COVID-19 and lockdown policies we find that banks more exposed to pandemic and lockdown policies show an increase in loss provisions and non-performing loans. While we observe an increase in corporate, especially small business, lending growth, this is driven by government-guaranteed loans. Finally, we observe a reduction in the number and average amount of syndicated loans for banks more affected by the pandemic as well as an increase in interest spreads and decrease in maturities. These findings point to a negative impact of the pandemic and swift reactions bybanks.
Keywords: COVID-19; Banking
JEL Codes: G21
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| COVID-19 outbreaks (F44) | increase in loss provisions (G33) |
| COVID-19 outbreaks (F44) | increase in non-performing loans (G21) |
| lockdown policies (J18) | increase in loss provisions (G33) |
| lockdown policies (J18) | increase in non-performing loans (G21) |
| COVID-19 outbreaks (F44) | increase in unemployment (J64) |
| lockdown policies (J18) | increase in unemployment (J64) |
| government-guaranteed loans (H81) | increase in corporate lending growth (O16) |
| pandemic exposure (E71) | decrease in number of syndicated loans (G21) |
| pandemic exposure (E71) | decrease in average amount of syndicated loans (G21) |
| pandemic exposure (E71) | increase in interest spreads (F65) |
| pandemic exposure (E71) | decrease in maturities (E43) |
| supply factors (J23) | increase in small business lending (G21) |