Skip to Main Content
HBS Home
  • About
  • Academic Programs
  • Alumni
  • Faculty & Research
  • Baker Library
  • Giving
  • Harvard Business Review
  • Initiatives
  • News
  • Recruit
  • Map / Directions
Faculty & Research
  • Faculty
  • Research
  • Featured Topics
  • Academic Units
  • …→
  • Harvard Business School→
  • Faculty & Research→
Publications
Publications
  • 2023
  • Working Paper
  • HBS Working Paper Series

When Should Public Programs Be Privately Administered? Theory and Evidence from the Paycheck Protection Program

By: Alexander Bartik, Zoë B. Cullen, Edward L. Glaeser, Michael Luca, Christopher Stanton and Adi Sunderam
  • Format:Print
  • | Language:English
  • | Pages:105
ShareBar

Abstract

What happens when public resources are allocated by private companies whose objectives may be imperfectly aligned with policy goals? We study this question in the context of the Paycheck Protection Program (PPP), which relied on private banks to disburse aid to small businesses rapidly. Our model shows that delegation is optimal when delay is sufficiently costly, variation across firms in the impact of funds is small, and the alignment between public and private objectives is high. We use novel firm-level survey data that contains information on banking relationships to measure heterogeneity in the impact of PPP and to assess whether banks targeted loans to high-impact firms. Banks did target loans to their most valuable pre-existing customers. However, using an instrumental variables approach that exploits variation in banks’ loan processing speeds, we find that treatment effect heterogeneity is sufficiently moderate, delay is sufficiently costly, and bank and social objectives are sufficiently aligned that delegation was likely superior to delaying loans to improve targeting.

Keywords

Paycheck Protection Program; Targeting; Impact; Entrepreneurship; Health Pandemics; Small Business; Financing and Loans; Outcome or Result; United States

Citation

Bartik, Alexander, Zoë B. Cullen, Edward L. Glaeser, Michael Luca, Christopher Stanton, and Adi Sunderam. "When Should Public Programs Be Privately Administered? Theory and Evidence from the Paycheck Protection Program." Harvard Business School Working Paper, No. 21-021, August 2020. (Revised July 2023. Accepted at The Review of Economics and Statistics.)
  • SSRN
  • Read Now

About The Authors

Zoe B. Cullen

Entrepreneurial Management
→More Publications

Christopher T. Stanton

Entrepreneurial Management
→More Publications

Adi Sunderam

Finance
→More Publications

More from the Authors

    • Faculty Research

    Shifting Work Patterns with Generative AI

    By: Eleanor W. Dillon, Sonia Jaffe, Nicole Immorlica and Christopher T. Stanton
    • May 2025
    • AEA Papers and Proceedings

    Workplace Segregation Between College and Non-college Workers

    By: Francis Dillon, Edward L. Glaeser and William Kerr
    • 2025
    • Faculty Research

    Navigating Choppy Waters: How U.S. Trade Policy Uncertainty Affects Small Businesses

    By: David Atkin, Zoë Cullen and Ebehi Iyoha
More from the Authors
  • Shifting Work Patterns with Generative AI By: Eleanor W. Dillon, Sonia Jaffe, Nicole Immorlica and Christopher T. Stanton
  • Workplace Segregation Between College and Non-college Workers By: Francis Dillon, Edward L. Glaeser and William Kerr
  • Navigating Choppy Waters: How U.S. Trade Policy Uncertainty Affects Small Businesses By: David Atkin, Zoë Cullen and Ebehi Iyoha
ǁ
Campus Map
Harvard Business School
Soldiers Field
Boston, MA 02163
→Map & Directions
→More Contact Information
  • Make a Gift
  • Site Map
  • Jobs
  • Harvard University
  • Trademarks
  • Policies
  • Accessibility
  • Digital Accessibility
Copyright © President & Fellows of Harvard College.