Flooded through the back door: Firm-level effects of banks' lending shifts

Oliver Rehbein

No 4/2018, IWH Discussion Papers from Halle Institute for Economic Research (IWH)

Abstract: I show that natural disasters transmit to firms in non-disaster areas via their banks. This spillover of non-financial shocks through the banking system is stronger for banks with less regulatory capital. Firms connected to a disaster-exposed bank with below median capital reduce their employment by 11% and their fixed assets by 20% compared to firms in the same region without such a bank during the 2013 flooding in Germany. Relationship banking and higher firm capital also mitigate the effects of such negative cross-regional spillovers.

Keywords: natural disaster; real effects; shock transmission; bank capital (search for similar items in EconPapers)
JEL-codes: E24 E44 G21 G29 (search for similar items in EconPapers)
Date: 2018
New Economics Papers: this item is included in nep-ban and nep-mac
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Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:zbw:iwhdps:42018

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