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

39 Pages Posted: 31 Mar 2014 Last revised: 26 Nov 2016

Emek Basker

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

Javier Miranda

U.S. Census Bureau - Center for Administrative Records Research and Applications

Multiple version iconThere are 2 versions of this paper

Date Written: November 17, 2016

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 low survival 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, pointing to a socially inefficient level of exits and distortions to allocative efficiency.

Keywords: Capital shock, business survival, financial constraints, hurricane, Katrina, Longitudinal Business Database

JEL Classification: D22, G32, L11, L81

Suggested Citation

Basker, Emek and Miranda, Javier, Taken by Storm: Business Financing and Survival in the Aftermath of Hurricane Katrina (November 17, 2016). Available at SSRN: https://ssrn.com/abstract=2417911 or http://dx.doi.org/10.2139/ssrn.2417911

Emek Basker (Contact Author)

U.S. Census Bureau - Center for Economic Studies ( email )

4600 Silver Hill Road
Washington, DC 20233-9100
United States

University of Missouri - Department of Economics ( email )

118 Professional Building
Columbia, MO 65211
United States

HOME PAGE: http://emekbasker.org

Javier Miranda

U.S. Census Bureau - Center for Administrative Records Research and Applications ( email )

4700 Silver Hill Road
Washington, DC 20233
United States

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