Dressing up for stormy weather
: bank lending to SME’s in the face of natural disasters : evidence from the U.S. market

  • Jil Luca Birgel (Student)

Student thesis: Master's Thesis

Abstract

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 Award24 Jan 2022
Original languageEnglish
Awarding Institution
  • Universidade Católica Portuguesa
SupervisorGeraldo Cerqueiro (Supervisor)

Keywords

  • Disaster lending
  • Credit supply
  • Natural disasters
  • Bank
  • SME

Designation

  • Mestrado em Finanças

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