Natural Disaster and Bank Stability: Evidence from the U.S. Financial System

61 Pages Posted: 21 Feb 2017 Last revised: 20 Jun 2023

See all articles by Felix Noth

Felix Noth

Otto-von-Guericke-Universität Magdeburg; Halle Institute for Economic Research

Ulrich Schüwer

Goethe University Frankfurt - Department of Finance; Leibniz Institute for Financial Research SAFE

Date Written: April 25, 2018

Abstract

We show that weather-related natural disasters in the United States significantly weaken the financial stability of banks with business activities in affected regions. This is reflected in higher probabilities of default, lower z-scores, higher non-performing assets ratios, higher foreclosure ratios, lower returns on assets and lower equity ratios of affected banks in the years following a natural disaster. The effects are economically relevant and highlight the financial vulnerability of banks and their borrowers despite insurances and public aid programs.

Keywords: natural disasters, bank stability, non-performing assets, bank performance

JEL Classification: G21, Q54

Suggested Citation

Noth, Felix and Noth, Felix and Schüwer, Ulrich, Natural Disaster and Bank Stability: Evidence from the U.S. Financial System (April 25, 2018). SAFE Working Paper No. 167, Journal of Environmental Economics and Management, Vol. 119, No. 102792, 2023, Available at SSRN: https://ssrn.com/abstract=2921000 or http://dx.doi.org/10.2139/ssrn.2921000

Felix Noth

Otto-von-Guericke-Universität Magdeburg ( email )

Universitätspl. 2
PSF 4120
Magdeburg, D-39106
Germany

Halle Institute for Economic Research

P.O. Box 11 03 61
Kleine Maerkerstrasse 8
Halle, 06108
Germany

HOME PAGE: http://www.iwh-halle.de/asp/person.asp?fnh&Lang=e&Abteilung=fin

Ulrich Schüwer (Contact Author)

Goethe University Frankfurt - Department of Finance ( email )

House of Finance
Theodor-W.-Adorno-Platz 3
Frankfurt, 60323
Germany

HOME PAGE: http://www.wiwi.uni-frankfurt.de/de/abteilungen/finance/home.html

Leibniz Institute for Financial Research SAFE ( email )

(http://www.safe-frankfurt.de)
Theodor-W.-Adorno-Platz 3
Frankfurt am Main, 60323
Germany

HOME PAGE: http://safe-frankfurt.de/

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