Natural disasters and international financial flows: global evidence

Alex Bao, Whelsy Boungou and Théo Lamagnere
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Alex Bao: BSE - Bordeaux sciences économiques - UB - Université de Bordeaux - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement
Whelsy Boungou: PSB - Paris School of Business - HESAM - HESAM Université - Communauté d'universités et d'établissements Hautes écoles Sorbonne Arts et métiers université
Théo Lamagnere: BSE - Bordeaux sciences économiques - UB - Université de Bordeaux - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement

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Abstract: This article examines whether the intensity of natural disasters impacts capital inflows. We decompose capital inflows into equity-based and debt-based components, allowing us to better identify the channels through which natural disasters affect capital inflows. Using data from over 150 countries between 1990 and 2021, we empirically show that capital inflows decline following natural disasters. However, this effect varies across capital flow types, primarily affecting portfolio equity and debt flows. Additionally, our findings highlight significant country heterogeneity: lower living standards, weaker infrastructure, and lower government efficiency are associated with greater vulnerability of capital inflows to natural disasters. Finally, we demonstrate that results are sensitive to the choice of disaster measures, suggesting that different measures may capture distinct transmission channels linking natural disasters and capital flows.

Keywords: Debt; Equity; Financial flows; Natural disasters (search for similar items in EconPapers)
Date: 2026-02-09
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Published in Review of World Economics, 2026, ⟨10.1007/s10290-025-00629-w⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-05528464

DOI: 10.1007/s10290-025-00629-w

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