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The Impact of Floods on Firms’ Performance

Quaderni - Working Paper DSE N° 946

40 Pages Posted: 24 May 2014  

Federica Coelli

University of Bologna - Department of Economics

Paolo Manasse

Università degli Studi di Bologna - Department of Economics; IGIER, Bocconi University; International Monetary Fund (IMF) - Fiscal Affairs Department

Date Written: May 13, 2014

Abstract

We estimate the short-run impact of a major flood that hit the region of Veneto in 2010 on firms' performance. Using firm level data and a difference in difference approach we compare the value added growth of hit firms to the one of a control group of companies that are not exposed to the flood. The results indicate that the value added growth of affected firms is 6.9% higher two years after the flood. We further investigate the role of aid transfers in the aftermath of the disaster event. Considering both the flood and the aid treatment, we construct four mutually exclusive and exhaustive groups. The results indicate that, among firms exposed to the flood, both the ones that benefit from financial aid and the ones that don't grow faster than the reference groups of firms that neither are exposed to the flood, nor receive financial aid. We also find a 2% additional growth effect that is attributable to the contribution of aid in the recovery phase.

Keywords: natural disasters, flood, firm growth, difference in differences, financial aid

JEL Classification: D24, Q54, R10, C23

Suggested Citation

Coelli, Federica and Manasse, Paolo, The Impact of Floods on Firms’ Performance (May 13, 2014). Quaderni - Working Paper DSE N° 946. Available at SSRN: https://ssrn.com/abstract=2440712 or http://dx.doi.org/10.2139/ssrn.2440712

Federica Coelli (Contact Author)

University of Bologna - Department of Economics ( email )

Strada Maggiore 45
Bologna, 40125
Italy

Paolo Manasse

Università degli Studi di Bologna - Department of Economics ( email )

Via Strada Maggiore, 45
I-40125 Bologna
Italy
+39 05 1209 2613 (Phone)

IGIER, Bocconi University

Via Sarfatti 25
20136 Milan, MI 20136
Italy
+39 02 5836 3326 (Phone)

International Monetary Fund (IMF) - Fiscal Affairs Department ( email )

700 19th Street, NW
Washington, DC 20431
United States

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