The Impact of a Man-made Disaster on Consumer Credit Outcomes: Evidence from the 2018 Merrimack Valley Natural Gas Explosions

Bo Zhao

No 23-17, Working Papers from Federal Reserve Bank of Boston

Abstract: This paper is the first to empirically examine the impact of a man-made disaster on consumer credit outcomes. It uses the 2018 Merrimack Valley natural gas explosions as a quasi-random natural experiment and shows that the explosions had a temporary negative effect on debt balances, credit limits, and the number of delinquencies, and did not affect credit scores. The decreases in debt balances and credit limits were likely driven by a decline in credit demand when the affected individuals faced severe life disruption, great uncertainty, and negative financial shocks associated with the disaster. It took some time for the explosions to have an impact on delinquencies, suggesting that the affected individuals may have received short-term forbearance or used default as a last resort. The lack of large, long-lasting effects of the explosions likely reflects the critical role that external assistance to the affected communities played in mitigating the disaster’s impact.

Keywords: man-made disasters; household credit; consumer debt (search for similar items in EconPapers)
JEL-codes: D14 G51 Q59 (search for similar items in EconPapers)
Pages: 58
Date: 2023-09-01
New Economics Papers: this item is included in nep-ene, nep-env and nep-pay
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.bostonfed.org/publications/research-de ... umer-credit-outcomes Summary (text/html)
https://www.bostonfed.org/-/media/Documents/Workingpapers/PDF/2023/wp2317.pdf Full text (application/pdf)

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:fip:fedbwp:97402

Ordering information: This working paper can be ordered from

DOI: 10.29412/res.wp.2023.17

Access Statistics for this paper

More papers in Working Papers from Federal Reserve Bank of Boston Contact information at EDIRC.
Bibliographic data for series maintained by Catherine Spozio ().