Abstract

http://ssrn.com/abstract=2417911
 


 



Taken by Storm: Business Financing, Survival, and Contagion in the Aftermath of Hurricane Katrina


Emek Basker


University of Missouri - Department of Economics; U.S. Census Bureau - Center for Economic Studies

Javier Miranda


U.S. Census Bureau - Center for Economic Studies

October 23, 2014


Abstract:     
We use hurricane Katrina's damage to the Mississippi coast in 2005 as a natural experiment to study business survival in the aftermath of a capital-destruction shock. We find very high exit rates for businesses that incurred physical damage, particularly for small firms and less-productive establishments. Auxiliary evidence from the Survey of Business Owners suggests that the differential size effect is tied to the presence of financial constraints. In the long run, the cumulative effect of the storm was even larger, compounded by local demand externalities due to the proximity of surviving businesses to damaged businesses that had exited. These forces explain why the most heavily damaged coastal areas of Mississippi had not recovered within five years despite significant help from both federal and state sources.

Number of Pages in PDF File: 49

Keywords: Retail, chain, financial constraints, hurricane, Katrina, natural disaster, exit, contagion

JEL Classification: D22, L11, L81, L83, Q54

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Date posted: March 31, 2014 ; Last revised: October 24, 2014

Suggested Citation

Basker, Emek and Miranda, Javier, Taken by Storm: Business Financing, Survival, and Contagion in the Aftermath of Hurricane Katrina (October 23, 2014). Available at SSRN: http://ssrn.com/abstract=2417911 or http://dx.doi.org/10.2139/ssrn.2417911

Contact Information

Emek Basker (Contact Author)
University of Missouri - Department of Economics ( email )
118 Professional Building
Columbia, MO 65211
United States
573-882-6023 (Phone)
573-882-2697 (Fax)
HOME PAGE: http://web.missouri.edu/~baskere/
U.S. Census Bureau - Center for Economic Studies ( email )
4600 Silver Hill Road
Washington, DC 20233-9100
United States
Javier Miranda
U.S. Census Bureau - Center for Economic Studies ( email )
4700 Silver Hill Road
Washington, DC 20233
United States
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