Small Grant Scheme on Pandemics, Cities, Regions & Industry: Racial Disparities of the Paycheck Protection Program: Focusing on Structural Differences in Banking Infrastructure
This project examines the distributional outcomes of the Paycheck Protection Program (PPP), which was implemented by the U.S. federal government to preserve jobs in small businesses in response to the 2020 coronavirus pandemic. In particular, this project aims to investigate PPP’s distributional outcomes with respect to racial disparities.
The primary goal of PPP was to support cash flows to businesses as quickly as possible, and it achieved this by distributing $700 billion in 100% forgivable loans through over 5,000 financial institutions within 24 days in April 2020. As the PPP utilized the private banking network, it is likely that regional banking market characteristics influenced PPP loan access and distribution. While previous studies have reported mixed results regarding racial disparities in PPP loan distribution, it is important to revisit this issue due to its significance.
One of the most important reasons is that documented disparities may merely reflect the pre-pandemic differences in revenues and structural factors rather than the policy itself. Pandemic aid policies aim to maintain the pre-pandemic status quo instead of addressing the existing structural biases that cause racial disparities. This project plans to distinguish pre-pandemic structural factors from the design features of PPP to clarify confusion in the literature on PPP and to provide insights to policymakers for preparing for future disasters.
“I am grateful for the support from the RSA and for becoming part of the RSA network of researchers and practitioners to make a difference. I am looking forward to sharing my work and contributing to the RSA community.”
Principal investigator: Soomi Lee
Soomi Lee is a Professor in the Department of Public Administration at the University of La Verne. She teaches research design and quantitative methods, public economics, public policy analysis, and urban studies. Her research interests include state and local public finance, fiscal institutions, tax policy, redistributive policies, and urban economic resilience. Her work appeared in Urban Studies, Urban Affairs Review, Regional Studies, Journal of Socioeconomics, State Politics and Policy Quarterly, Public Finance Review, Basic Income Studies, and other outlets. She is a recipient of several grants and best paper awards. She earned her Ph.D. in Economics and Political Science from the Claremont Graduate University in 2011.