The Impact of Natural Disasters on Bank Performance and the Moderating Role of Financial Integration

Posted: 7 Nov 2020

See all articles by Dung Thuy Thi Nguyen

Dung Thuy Thi Nguyen

University of Otago - Department of Accountancy and Finance; Academy of Finance

Ivan Diaz-Rainey

CEFGroup & Department of Accountancy and Finance, University of Otago

Helen Roberts

University of Otago - Department of Accountancy and Finance

Minh Le

Faculty of Finance and Banking, University of Economics and Law, VNU-HCM, Vietnam

Date Written: September 18, 2020

Abstract

Using a sample of East Asian banks covering the period 1999-2014, this paper analyses the impact of natural disasters on commercial bank performance and how financial integration moderates this relationship. A dynamic GMM model reveals that natural disasters significantly lower deposit ratios but have no contemporaneous relationship with liquidity, credit risk, profitability and default risk. The paper also shows that foreign banking claims, specifically those extended by regional Asian lenders, help to alleviate the deposits decline in the aftermath of natural disasters. These results highlight the role of commercial bank deposits and foreign banking claims as sources of finance for post-disaster recovery. In particular, the resilience of Asian foreign claims in the event of natural disasters provides evidence to support intra-regional financial integration in East Asia.

Keywords: Natural Disaster, Bank Performance, Financial Integration, Dynamic GMM, East Asia

JEL Classification: C14, G21, D24, F36, F38

Suggested Citation

Thuy Thi Nguyen, Dung and Thuy Thi Nguyen, Dung and Diaz-Rainey, Ivan and Roberts, Helen and Le, Minh, The Impact of Natural Disasters on Bank Performance and the Moderating Role of Financial Integration (September 18, 2020). Available at SSRN: https://ssrn.com/abstract=3694864

Dung Thuy Thi Nguyen (Contact Author)

Academy of Finance ( email )

8 Phan Huy Chu
Phan Chu Trinh Street
Hanoi
Vietnam

University of Otago - Department of Accountancy and Finance ( email )

PO Box 56
Dunedin, 9054
New Zealand

Ivan Diaz-Rainey

CEFGroup & Department of Accountancy and Finance, University of Otago ( email )

Dunedin
New Zealand

Helen Roberts

University of Otago - Department of Accountancy and Finance ( email )

PO Box 56
Dunedin, 9054
New Zealand
6434798072 (Phone)
6434798171 (Fax)

Minh Le

Faculty of Finance and Banking, University of Economics and Law, VNU-HCM, Vietnam ( email )

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