Financing Severe Climate Risk: Evidence from Businesses During Hurricane Harvey

55 Pages Posted: 7 Jan 2021

See all articles by Benjamin Collier

Benjamin Collier

Temple University - Risk Management & Insurance & Actuarial Science

Lawrence Powell

University of Alabama - Culverhouse College of Commerce & Business Administration

Marc A. Ragin

University of Georgia - Department of Insurance, Legal Studies, Real Estate; University of Georgia

Xuesong You

Temple University - Department of Risk, Insurance & Healthcare Management

Date Written: December 3, 2020

Abstract

We examine small business financing outcomes approximately one year after Hurricane Harvey. Our data include the credit reports of 8,219 businesses and a detailed survey of 273 businesses in the affected area. We find that Harvey-related flooding increased credit delinquencies, especially short-term delinquencies. We also find that firms without existing debt took on debt following Harvey; however, firms most commonly reported financing recovery using earnings and the owner's personal resources. Finally, we find that firms with owners who are worried about climate change increased their risk financing following Harvey. Our analyses provide novel insights into firms' risk management and financing choices.

Keywords: Financing Frictions, Climate Risk, Corporate Risk Management

JEL Classification: D22, G32, Q54

Suggested Citation

Collier, Benjamin and Powell, Lawrence and Ragin, Marc A. and You, Xuesong, Financing Severe Climate Risk: Evidence from Businesses During Hurricane Harvey (December 3, 2020). Available at SSRN: https://ssrn.com/abstract=3741812 or http://dx.doi.org/10.2139/ssrn.3741812

Benjamin Collier (Contact Author)

Temple University - Risk Management & Insurance & Actuarial Science ( email )

Fox School of Business and Management
1301 Cecil B. Moore Ave.
Philadelphia, PA 19122
United States

Lawrence Powell

University of Alabama - Culverhouse College of Commerce & Business Administration ( email )

Culverhouse College of Business
Tuscaloosa, AL 35487-0223
United States

Marc A. Ragin

University of Georgia - Department of Insurance, Legal Studies, Real Estate ( email )

Athens, GA 30602-6254
United States

University of Georgia ( email )

Athens, GA 30602-6254
United States

Xuesong You

Temple University - Department of Risk, Insurance & Healthcare Management ( email )

1801 Liacouras Walk
Philadelphia, PA 19122
United States

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