How Does Credit Supply React to a Natural Disaster? Evidence from the Indian Ocean Tsunami

European Journal of Finance, Forthcoming

41 Pages Posted: 5 Feb 2016 Last revised: 14 Jan 2019

See all articles by Linh Nguyen

Linh Nguyen

University of St. Andrews

John O. S. Wilson

University of St. Andrews

Date Written: December 20, 2018

Abstract

The supply of credit may increase or decrease following a natural disaster, depending on the extent to which banks can absorb risk, and the economic prospects and demand for finance by affected firms and households. In this paper, we assess the impact of a natural disaster (Indian Ocean Tsunami of 2004) on the aggregate supply of credit to provinces throughout Thailand. The results of our investigation suggest that the tsunami has long-lasting negative effects on bank lending, albeit the effects are spread unevenly across geographic areas with most of the reduction in aggregate lending occurring in severely affected provinces. We also find that the presence of bank branches in affected regions mitigates some of the adverse lending effects that follow the tsunami.

Keywords: Difference-in-differences, Indian Ocean tsunami, bank lending, Thailand

JEL Classification: G21, G28

Suggested Citation

Nguyen, Linh and Wilson, John O. S., How Does Credit Supply React to a Natural Disaster? Evidence from the Indian Ocean Tsunami (December 20, 2018). European Journal of Finance, Forthcoming . Available at SSRN: https://ssrn.com/abstract=2728222 or http://dx.doi.org/10.2139/ssrn.2728222

Linh Nguyen (Contact Author)

University of St. Andrews ( email )

The Gateway
North Haugh
St Andrews, Fife KY16 9RJ
United Kingdom

John O. S. Wilson

University of St. Andrews ( email )

North St
Saint Andrews, Fife KY16 9AJ
United Kingdom

Register to save articles to
your library

Register

Paper statistics

Downloads
56
rank
362,266
Abstract Views
367
PlumX Metrics
!

Under construction: SSRN citations while be offline until July when we will launch a brand new and improved citations service, check here for more details.

For more information