How Bad Are Weather Disasters for Banks?

Kristian Blickle, Sarah Ngo Hamerling and Donald Morgan

No 990, Staff Reports from Federal Reserve Bank of New York

Abstract: Not very. We find even the most destructive weather disasters over the last quarter century had only modest effects on U.S. banks’ performance. This stability seems endogenous rather than a mere reflection of federal disaster aid, as disasters tend to increase loan demand which helps offset losses and boosts profits. Local banks avoid mortgage lending where floods are more common than official flood maps would predict, suggesting local knowledge may also mitigate disaster impacts. Our findings inform ongoing assessments of the physical risks to banks from climate change.

Keywords: hurricanes; wildfires; floods; climate change; weather disasters; FEMA; banks; financial stability; local knowledge (search for similar items in EconPapers)
JEL-codes: G01 G21 Q54 (search for similar items in EconPapers)
Pages: 49
Date: 2021-11-01
New Economics Papers: this item is included in nep-ban, nep-env, nep-fdg and nep-ure
Note: Revised October 2025.
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

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