Did Saving Wall Street Really Save Main Street? The Real Effects of TARP on Local Economic Conditions. (4th October 2017)

• Record Type: Journal Article
• Authors: Berger, Allen N.; Roman, Raluca A.
• Is Part Of: Journal of financial and quantitative analysis. Volume 52:Number 5(2017)
• Page Start: 1827
• Page End: 1867
• Publication Date: 2017-10-04
• Subjects: Finance -- Periodicals; Investments -- Mathematics -- Periodicals; 332.05
• DOI: 10.1017/S002210901700062X
• Languages: English
• ISSNs: 0022-1090

Abstract

Abstract : We investigate whether saving Wall Street through TARP really saved Main Street during the recent financial crisis. Our difference-in-difference analysis suggests that TARP statistically and economically significantly increased net job creation and net hiring establishments and decreased business and personal bankruptcies. The results are robust, including accounting for endogeneity. The main mechanisms driving the results appear to be increases in commercial real estate lending and off-balance-sheet real estate guarantees. These results suggest that saving Wall Street via TARP may have helped save Main Street, complementing the TARP literature and contributing to the cost–benefit debate.