Yanting Huang

What role do lenders play in household refinancing? This paper provides insights into this question. Using granular household-level data, the paper shows that an exogenous disruption to lender-household relationships substantially reduces a household's refinancing probability by 43.96%. Importantly, households do not switch to other lenders following a disruption. Instead, their probability of refinancing with new lenders also declines by 35.05%. The relationship disruption does not affect refinance loans' interest rates, fees, or performance. The evidence uncovers an informing role of relationship lenders, in which relationship lenders help households refinance by informing them of potential refinancing opportunities. The paper further develops a dynamic structural model and evaluates counterfactual policies targeted at relationship lenders. 

Despite their importance, spillover effects in policy programs are often ignored.  This paper investigates the spillover effects in a large-scale policy program, the Paycheck Protection Program. To identify the causal effects, the paper constructs an instrumental variable to capture PPP supply shocks to a business's competitors, based on variation in bank-level labor capacity. The empirical results show that a $100 increase in the average PPP loans granted to competitors leads to a 5.06% decline in a business's monthly sales, and this decline is entirely driven by a reduction in the number of transactions, while sales per transaction remains unchanged. The evidence is consistent with negative competition spillover effects. Additional tests suggest that the competition spillovers may also increase the likelihood of business shutdowns. Overall, the paper highlights the importance of accounting for spillover effects in program evaluation and policy design.