Banking on Snow: Bank Capital, Risk, and Employment

Simon Baumgartner, Alex Stomper, Thomas Schober and Rudolf Winter-Ebmer
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Simon Baumgartner: Humboldt University Berlin
Alex Stomper: Humboldt University Berlin

No 2023-02, Working Papers from Auckland University of Technology, Department of Economics

Abstract: How does small-firm employment respond to exogenous labour productivity risk? We find that this depends on the capitalization of firms’ local banks. The evidence comes from firms employing workers whose productivity depends on the weather. Weather- induced labour productivity risk reduces this employment, and this effect is stronger in regions where the regional banks have less equity capital. Bank capitalization also proxies for the extent to which the regional banks’ borrowers can obtain liquidity when the regions are hit by weather shocks. We argue that, as liquidity providers, well- capitalized banks support economic adaptation to climate change.

Date: 2023-03
New Economics Papers: this item is included in nep-ban, nep-eff, nep-env, nep-lma and nep-ure
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Related works:
Working Paper: Banking on Snow: Bank Capital, Risk, and Employment (2022)
Working Paper: Banking on Snow: Bank Capital, Risk, and Employment (2022)
Working Paper: Banking on Snow: Bank Capital, Risk, and Employment (2022)
Working Paper: Banking on Snow: Bank Capital, Risk, and Employment (2022)
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