Community bank liquidity: Natural disasters as a natural experiment

Kyle D. Allen, Matthew D. Whitledge and Drew B. Winters

Journal of Financial Stability, 2022, vol. 60, issue C

Abstract: We examine how community banks respond to liquidity shocks created by natural disasters. We address community banks’ responses to liquidity shocks due to their focused geographic and economic presence, which coincide with their communities’ exposure to the disasters and the ability of the local banks to meet their needs. We find that community banks respond to liquidity shocks by managing their balance sheet, rather than any single balance sheet account. In particular, we find that they respond to the liquidity needs of their communities by increasing loans as deposits are withdrawn.

Keywords: Community bank; Natural disaster; Liquidity (search for similar items in EconPapers)
JEL-codes: G21 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finsta:v:60:y:2022:i:c:s1572308922000304

DOI: 10.1016/j.jfs.2022.101002

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