The Impact of Natural Disasters on Risk Preference in Financial Investment

Ziling Ren ()
Additional contact information
Ziling Ren: University of Macau

A chapter in Proceedings of the 2025 10th International Conference on Financial Innovation and Economic Development (ICFIED 2025), 2025, pp 389-396 from Springer

Abstract: Abstract This research examines the impact of natural disasters on risk preferences of financial investments, highlighting significant behavioral changes during such events. By utilizing a comprehensive dataset combining Peer-to-Peer (P2P) investment data in the United States from 2005 to 2008 with recorded natural disasters, we apply OLS regression technique to ascertain the shifts in financial behaviors, especially focusing on the Borrower Maximum Rate. The analysis reveals that natural disasters notably increase financial risk aversion, compelling investors to choose higher interest rates to minimize potential losses. Moreover, this research also explores the influence of socioeconomic factors such as race to risk preferences, showing that black borrowers generally face higher rates. These findings underscore the sensibility of financial markets to external shocks. The implications of this research are crucial for policymakers and financial institutions aiming to forge more resilient economic systems in the face of natural disasters.

Keywords: Natural Disasters; P2P Investment; OLS Regression; Borrower Maximum Rate (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:advbcp:978-94-6463-702-1_42

Ordering information: This item can be ordered from
http://www.springer.com/9789464637021

DOI: 10.2991/978-94-6463-702-1_42

Access Statistics for this chapter

More chapters in Advances in Economics, Business and Management Research from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().