Climate Change and Financial Stability: The Weather Channel

Kristian Blickle and Donald Morgan

No 20220404, Liberty Street Economics from Federal Reserve Bank of New York

Abstract: Climate change could affect banks and the financial systems they anchor through various channels: increasingly extreme weather is one (Financial Stability Board, Basel Committee on Bank Supervision). In our recent staff report, we size up this channel by studying how U.S. banks, large and small, fared against disasters past. We find even the most destructive disasters had insignificant or small effects on bank stability and small and positive effects on bank income. We conjecture that recovery lending after disasters helps stabilize larger banks while smaller, local banks’ knowledge of “unmarked” (flood) hazards may help them navigate disaster risk. Federal disaster aid seems not to act as a bank stabilizer.

Keywords: climate change; financial stability (search for similar items in EconPapers)
JEL-codes: G21 (search for similar items in EconPapers)
Date: 2022-04-04
New Economics Papers: this item is included in nep-ban, nep-env, nep-fdg and nep-isf
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