When should private companies allocate public resources? In our model, delegation is attractive when delay is costly, the impact of funds is similar across firms, and government and private objectives are aligned. We use novel firm-level survey data to measure heterogeneity in the impact of the Paycheck Protection Program and to assess whether banks targeted loans to high-impact firms. Banks did target loans to their most valuable pre-existing customers. However, we find that treatment effect heterogeneity is moderate, suggesting that delegation was likely superior from the government’s perspective to delaying loans to improve targeting.

ABSTRACT We study links between the labor market for loan officers and access to mortgage credit. Using novel data matching mortgage applications to loan officers, we find that minorities are underrepresented among loan officers. Minority borrowers are less likely to complete mortgage applications, have completed applications approved, and to ultimately take up a loan. These disparities are reduced when minority borrowers work with minority loan officers. These pairings also lead to lower default rates, suggesting minority loan officers have an informational advantage with minority borrowers. Our results suggest minority underrepresentation among loan officers reduces minority borrowers’ access to credit.