I have completed another , this time on the effect of the pandemic and lockdown policies on banks’ health, lending growth and loan pricing in the US. Jointly with Jan Keil, we exploit geographic variation in
the exposure of US banks to COVID-19 and lockdown policies using branch network and branch-level deposit data. We find first that unemployment rates (the most accurate and most rapidly available indicator of economic activity) co-varies signiﬁcantly
across counties in the US in the ﬁrst three quarters of 2020 with COVID outbreaks and lockdown policies. Second, focusing on banks, we find that banks geographically more exposed to the pandemic and lockdown policies show (i) an increase in loan loss
provisions and non-performing loans, (ii) an increase in lending to small businesses, but not in other lending categories, and (iii) an increase in interest spreads and decrease in loan maturities. These results are consistent with previous findings that show
a general increase in lending after the onset of the crisis (related mostly to the drawdown of credit lines by large firms), while the bank-specific increase in small business lending might be explained with demand for government support programmes by small
businesses in the areas most affected. In a nutshell, these ﬁndings show that banks have already seen the negative impact of the pandemic and have reacted to higher lending risk with an adjustment in loan conditionality, but have also responded to higher
loan demand and government support programmes.