Reshaping the Local Marketplace: Financing, Independent Businesses, Large Firms, and COVID

We use granular high-frequency data to precisely estimate the effect of COVID demand shocks, bank branches, PPP, and neighborhood peers within 200 yards of retail pharmacies. Neighborhood banks softened the immediate shock for independent pharmacies, but the effect is small. PPP has a larger economic effect, significantly driven by peer effects. If neighborhood stores obtain PPP, whether locally or from out-of-state intermediaries, the store's probability of PPP uptake increases. The COVID shock has accelerated the decline of independent pharmacies, increasing the HHI in local markets by an economically significant 8%, which neither the PPP nor access to local banks prevents.