Household Finance after a Natural Disaster: The Case of Hurricane Katrina

Justin Gallagher and Daniel Hartley

No 1406, Working Papers (Old Series) from Federal Reserve Bank of Cleveland

Abstract: Little is known about how affected residents are able to cope with the fi nancial shock of a natural disaster. We investigate the impact that flooding from a major US hurricane had on household finance. Spikes in credit card borrowing and overall delinquency rates for the most flooded residents are modest in size and short-lived. Greater flooding results in larger reductions in total debt. Lower debt levels appear to be driven by homeowners using flood insurance to repay their mortgages rather than to rebuild. Debt reductions are larger in census tracts where mortgages were likely to be originated by nonlocal lenders.

Keywords: Household Finance; Insurance; Natural Disaster (search for similar items in EconPapers)
JEL-codes: D14 G21 H84 Q54 (search for similar items in EconPapers)
Pages: 53 pages
Date: 2014-08-12
New Economics Papers: this item is included in nep-ias and nep-ure
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Citations: View citations in EconPapers (7)

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Journal Article: Household Finance after a Natural Disaster: The Case of Hurricane Katrina (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:fip:fedcwp:1406

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DOI: 10.26509/frbc-wp-201406

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