A Demand Curve for Disaster Recovery Loans

55 Pages Posted: 5 May 2021 Last revised: 9 Dec 2022

See all articles by Benjamin Collier

Benjamin Collier

Temple University - Risk Management & Insurance & Actuarial Science

Cameron Ellis

University of Iowa

Date Written: December 8, 2022


We estimate and trace a credit demand curve for households that recently experienced damage
to their homes from a natural disaster. Our administrative data include over one million
applicants to a federal recovery loan program for households. We estimate extensive-margin
demand over a large range of interest rates. Our identification strategy exploits 24 natural experiments, leveraging exogenous, time-based variation in the program’s offered interest rate.
Interest rates meaningfully affect consumer demand throughout the distribution of rates. On
average, a 1 percentage point increase in the interest rate reduces loan take-up by 26%. We
find a large impact of applicants’ credit quality on demand and evidence of monthly payment

Keywords: Credit Demand, Household Finance, Financial Constraints, Climate Risk, Public Policy

JEL Classification: D12, G51, Q54

Suggested Citation

Collier, Benjamin and Ellis, Cameron, A Demand Curve for Disaster Recovery Loans (December 8, 2022). Fox School of Business Research Paper Forthcoming, Available at SSRN: https://ssrn.com/abstract=3839044 or http://dx.doi.org/10.2139/ssrn.3839044

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

Cameron Ellis

University of Iowa ( email )

Tippie College of Business
21 E Market st
Iowa City, IA 52246
United States

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