The Consequences of Natural Disasters on Banking Institutions

Andi Duqi

Chapter Chapter 3 in Banking Institutions and Natural Disasters, 2023, pp 31-58 from Palgrave Macmillan

Abstract: Abstract Extreme weather events threated the banking sector through depreciation of collateral, increase of counterparty bankruptcies, misvaluation of securities held in bank portfolios, and increase of funding risk. At the same time, post-disaster reconstruction boosts the demand for credit, which, if met by banks, can increase their revenues and improve their profitability. Bank regulators around the globe are taking several measures to address climate risk exposure of banks, such as climate stress tests or climate scenario analyses. However, these exercises are still at an early stage and do not adequately quantify the complex relationships between disasters, banks, and the real economy.

Keywords: Bank risk and profitability; Disaster risk; Bank stress tests; Banking regulation (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:pal:psifcp:978-3-031-36371-9_3

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DOI: 10.1007/978-3-031-36371-9_3

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