Natural Disaster and Bank Stability: Evidence from the U.S. Financial System
Zusammenfassung
We show that property damages from weather-related natural disasters significantly weaken the stability of banks with business activities in affected regions, as reflected in lower z-scores, higher probabilities of default, higher non-performing assets ratios, higher foreclosure ratios, lower returns on assets, and lower bank equity ratios. The effects are economically relevant and suggest that insurance payments and public aid programs do not sufficiently protect bank borrowers against financial difficulties. We also find that the adverse effects on bank stability dissolve after some years if no further disasters occur during that time.
Forschungsbereich
Financial Institutions
Systemic Risk Lab
Systemic Risk Lab
Schlagworte
natural disasters, bank stability, non-performing assets, bank performance
JEL-Klassifizierung
G21, Q54
Thema
Saving and Borrowing
Systematic Risk
Stability and Regulation
Systematic Risk
Stability and Regulation
Beziehungen
1
Publikationstyp
Working Paper
Link zur Publikation
Collections
- LIF-SAFE Working Papers [334]