The Review of Corporate Finance Studies Vol. 14 No. 4 2025

The Politics of the Paycheck Protection Program

Deniz Igan¹; Thomas Lambert²; Prachi Mishra³; Eden Quxian Zhang⁴

¹ International Monetary Fund and CEPR · ² Rotterdam School of Management Erasmus University · ³ Isaac Center for Public Policy, Ashoka University , · ⁴ Monash Business School, Monash University ,

Abstract

Does partisanship influence loan allocation through the Paycheck Protection Program (PPP)? We examine the 2020 Presidential campaign contributions made by lenders’ employees as a partisanship measure and leverage the PPP’s phased implementation under both the Trump and the Biden administrations. We find that partisan misalignment increases lending, particularly to small and first-time PPP borrowers, as well as those in Republican areas. Misalignment is also associated with higher payroll coverage for small businesses. Our findings are consistent with Republican-leaning lenders viewing the PPP’s 2021 phase as a legacy policy of the prior administration, shedding new light on the partisan-alignment phenomenon in finance.

DOI

10.1093/rcfs/cfaf013

Volume

14

Issue

4

Pages

1083-1122

Language

en

Sources

openalex bibtex:phds-export.bib crossref

Cite

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