Natural Disasters and Financial Stress: Can Macroprudential Regulation Tame Green Swans?

Pauline Avril (), Grégory Levieuge and Camelia Romocea Turcu
Additional contact information
Pauline Avril: Université d'Orléans

No 2021.13, Working Papers from International Network for Economic Research - INFER

Abstract: We empirically investigate the impact of natural disasters on the external finance premium (EFP), conditional on the stringency of macroprudential regulation. The intensity of natural disasters is measured through an original set of geophysical indicators for a sample of 88 countries over the period 1996-2016. Using local projections, we show that, following storms, the EFP significantly drops (rises) when macroprudential regulation is stringent (lax). This suggests that regulated financial systems could foster favorable financing conditions to replace destroyed capital with more productive capital. Macroprudential stringency seems less crucial in the case of floods, the predictability of which may prompt self-discipline.

Keywords: Financial stress; External finance premium; Macroprudential policy; Natural disasters; Local projections. (search for similar items in EconPapers)
JEL-codes: E (search for similar items in EconPapers)
Pages: 48 pages
Date: 2021
New Economics Papers: this item is included in nep-cba, nep-env, nep-fdg and nep-mac
References: Add references at CitEc
Citations:

Downloads: (external link)
https://infer-research.eu/wp-content/uploads/2021/12/WP2021.13-1.pdf First version, 2021 (application/pdf)

Related works:
Working Paper: Natural Disasters and Financial Stress: Can Macroprudential Regulation Tame Green Swans? (2022)
Working Paper: Natural Disasters and Financial Stress: Can Macroprudential Regulation Tame Green Swans? (2021)
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:inf:wpaper:2021.13

Access Statistics for this paper

More papers in Working Papers from International Network for Economic Research - INFER Contact information at EDIRC.
Bibliographic data for series maintained by Pedro Cerqueira ( this e-mail address is bad, please contact ).