Financing Severe Climate Risk: Evidence from Businesses During Hurricane Harvey
55 Pages Posted: 7 Jan 2021
Date Written: December 3, 2020
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: Suggested Citation