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How Bad Are Weather Disasters for Banks?

Kristian Blickle, Sarah Ngo Hamerling and Donald Morgan

No 990, Staff Reports from Federal Reserve Bank of New York

Abstract: Not very. We find that weather disasters over the last quarter century had insignificant or small effects on U.S. banks’ performance. This stability seems endogenous rather than a mere reflection of federal aid. Disasters increase loan demand, which offsets losses and actually boosts profits at larger banks. Local banks tend to avoid mortgage lending where floods are more common than official flood maps would predict, suggesting that local knowledge may also mitigate disaster impacts.

Keywords: hurricanes; wildfires; floods; climate change; weather disasters; FEMA; banks; financial stability; local knowledge (search for similar items in EconPapers)
JEL-codes: G21 H84 (search for similar items in EconPapers)
Pages: 36
Date: 2021-11-01
New Economics Papers: this item is included in nep-ban, nep-env, nep-fdg and nep-ure
Note: Revised January 2022.
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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