My work examines the lending behavior of U.S. banks to SMEs in the aftermath of natural disasters. The study is based on 2016-2019 panel data at bank-county-neighborhood-year level. To identify a causal effect of natural disasters on bank lending, I use an ordinary least squares regression model with group fixed effects. My results demonstrate that there are differences in post shock lending behavior of affected local versus non-local banks. In normal times a strong positive relationship can be observed between SME lending and local bank presence, my results show robust evidence for the existence of a negative disaster lending effect. After a natural disaster, local banks lend significantly less to firms in affected areas than non-local banks. This pattern manifests itself especially for major disasters and hurricanes. My results further show different disaster lending effects based on the income structure of affected regions. I observe positive disaster lending effects for high income regions, negative effects for lower income regions.
Date of Award | 24 Jan 2022 |
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Original language | English |
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Awarding Institution | - Universidade Católica Portuguesa
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Supervisor | Geraldo Cerqueiro (Supervisor) |
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- Disaster lending
- Credit supply
- Natural disasters
- Bank
- SME
Dressing up for stormy weather: bank lending to SME’s in the face of natural disasters : evidence from the U.S. market
Birgel, J. L. (Student). 24 Jan 2022
Student thesis: Master's Thesis