Crop damage, local climate risk perceptions, and small business access to credit

Jun Duanmu, Yongjia Li, Salman Tahsin and Jiayi Xu

International Review of Financial Analysis, 2025, vol. 102, issue C

Abstract: This paper examines the impact of natural disasters on Small Business Administration (SBA) 7(a) loan originations, highlighting how such events influence lenders' perceptions of climate and thus affect credit access for small businesses. We find a significant reduction in SBA loan originations in disaster-affected counties, suggesting a more cautious approach by lenders. This paper also explores how geographical diversification and minority ownership affect loan origination and investigates the role of public climate belief in shaping lending activities. The findings highlight the important connection between natural disasters and bank lending decisions, offering valuable insights into the challenges small businesses face in areas affected by climate change.

Keywords: Small business loan; Climate change; Natural disasters; Minority banks; Local banks (search for similar items in EconPapers)
JEL-codes: G20 G21 Q54 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finana:v:102:y:2025:i:c:s1057521925001838

DOI: 10.1016/j.irfa.2025.104096

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