NATURAL DISASTERS, DAMAGE TO BANKS, AND FIRM INVESTMENT

Kaoru Hosono, Daisuke Miyakawa, Taisuke Uchino, Makoto Hazama, Arito Ono, Hirofumi Uchida and Iichiro Uesugi

International Economic Review, 2016, vol. 57, issue 4, 1335-1370

Abstract: This article investigates the effect of banks’ lending capacity on firms’ investment. To identify exogenous shocks to loan supply, we utilize the natural experiment provided by Japan's Great Hanshin‐Awaji earthquake in 1995. Using a unique data set that allows us to identify firms and banks in the earthquake‐affected areas, we find that the investment ratio of firms located outside the earthquake‐affected areas but having a main bank inside the areas was significantly smaller than that of firms located outside the areas and having a main bank outside the areas. Our findings suggest that loan supply shocks affect firm investment.

Date: 2016
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Citations: View citations in EconPapers (18)

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https://doi.org/10.1111/iere.12200

Related works:
Working Paper: Natural Disasters, Damage to Banks, and Firm Investment (2012)
Working Paper: Natural Disasters, Damage to Banks, and Firm Investment (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:wly:iecrev:v:57:y:2016:i:4:p:1335-1370

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