Natural disasters and bank stability: Evidence from the U.S. financial system

Felix Noth and Ulrich Schüwer

Journal of Environmental Economics and Management, 2023, vol. 119, issue C

Abstract: We show that weather-related natural disasters in the United States significantly weaken the financial stability of banks with business activities in affected regions. This is reflected in higher probabilities of default, lower z-scores, higher non-performing assets ratios, higher foreclosure ratios, lower returns on assets and lower equity ratios of affected banks in the years following a natural disaster. The effects are economically relevant and highlight the financial vulnerability of banks and their borrowers despite insurances and public aid programs.

Keywords: Natural disasters; Bank stability; Non-performing assets; Bank performance (search for similar items in EconPapers)
JEL-codes: G21 Q54 (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (8)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jeeman:v:119:y:2023:i:c:s0095069623000104

DOI: 10.1016/j.jeem.2023.102792

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