What Do Quasi-Experiments Tell Us About the Response of Banks and Their Depositors to Natural Disasters?

James Barth, Kang-Bok Lee and Yeosong Yoon
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Kang-Bok Lee: Auburn University, Alabama, U.S.A
Yeosong Yoon: University of Tampa, Florida, U.S.A

American Business Review, 2024, vol. 27, issue 2, 607-622

Abstract: Over the past two decades, more than 11,000 U.S. counties have been impacted by natural disasters. This study investigates how banks and their depositors respond to such events using a difference-in-difference-in-differences (DDD) methodology combined with coarsened exact matching (CEM). Analyzing 1.3 million observations from 1999 to 2017, we find that natural disasters lead to a significant increase in deposit rates but do not affect the volume of deposits. Our findings suggest that banks raise deposit rates to counteract the potential withdrawal of funds, thereby maintaining stable deposit levels. This research provides new insights into the causal dynamics of deposit supply and demand in the face of natural disasters.

Keywords: Natural Disasters; Banks; Deposits; Deposit Rates; Difference-in-Difference-in-Differences; Bank Branches (search for similar items in EconPapers)
JEL-codes: G21 Q54 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:ris:ambsrv:0116

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