Third, what has been the role of different types of banks during the crisis? Chris
James and co-authors show for the US that small banks responded faster to Paycheck Protection Program (PPP) loan requests and lent more intensively to small businesses than larger banks, which suggest that community banks remain an important conduit for
small business credit particularly during crises when a rapid response is required; a clear indication that relationship lending can be helpful in crisis situations, as shown in my own work for the Global Financial Crisis. And interestingly, Mustafa
Karakaplan finds that these loans were not substitutes but rather complements to regular small business lending, with a multiplier effect of one dollar of PPP credit on conventional loans to the smallest firms of about an extra dollar.