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Natural disasters and bank stability: Evidence from the U.S. financial system

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  • Noth, Felix
  • Schüwer, Ulrich
Abstract
We document that natural disasters significantly weaken the stability of banks with business activities in affected regions. This is reflected, among others, in higher probabilities of default and foreclosure 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 dissolve after some years if no further disasters occur in the meantime.

Suggested Citation

  • Noth, Felix & Schüwer, Ulrich, 2017. "Natural disasters and bank stability: Evidence from the U.S. financial system," VfS Annual Conference 2017 (Vienna): Alternative Structures for Money and Banking 168263, Verein für Socialpolitik / German Economic Association.
    • Handle: RePEc:zbw:vfsc17:168263
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    References listed on IDEAS

    as
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    Cited by:

    1. Radoslav Raykov & Consuelo Silva-Buston, 2018. "Multibank Holding Companies and Bank Stability," Staff Working Papers 18-51, Bank of Canada.
    2. Raykov, Radoslav & Silva-Buston, Consuelo, 2020. "Holding company affiliation and bank stability: Evidence from the US banking sector," Journal of Corporate Finance, Elsevier, vol. 65(C).

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    More about this item

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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