Shaken, stirred and indebted: Firm-level effects of earthquakes

Kerim Arin, Josep Marti Arnau, Elif Boduroglu and Esref Celik

The Quarterly Review of Economics and Finance, 2024, vol. 97, issue C

Abstract: Using firm-level data from Turkiye, we investigate the effects of earthquakes on firms’ balance sheets. We find that earthquakes increase firms’ liabilities but have a smaller effect on firms’ assets, both in magnitude and significance. Using surveys sent to the finance and/or accounting managers of the largest 100 firms in Turkiye we identify common themes in their perceptions. Our findings reveal a consensus among respondents attributing the increased liabilities to exchange rate depreciation and lower business activity following a disaster. Conversely, higher availability of external credit is associated with a decrease in liabilities. Our analysis also indicates that finance managers with higher educational attainment may be underestimating the effects of earthquakes.

Keywords: Natural disasters; Firm-level data; Survey data; Perceptions; Causality; Difference-in-difference (search for similar items in EconPapers)
JEL-codes: B26 C23 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:quaeco:v:97:y:2024:i:c:s1062976924001005

DOI: 10.1016/j.qref.2024.101894

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