The Impact of an Extreme Weather Event on Business Performance

15 Pages Posted: 6 Nov 2021 Last revised: 29 Nov 2021

See all articles by Sumit Agarwal

Sumit Agarwal

National University of Singapore (NUS) - Sustainable & Green Finance Institute (SGFIN)

Mingxuan Fan

National University of Singapore (NUS)

Leora F. Klapper

World Bank; World Bank - Development Research Group (DECRG)

Edward Lee

Mastercard Center for Inclusive Growth

Abstract

We measure the impact of an extreme weather event on consumer spending and busines performance using transaction-level data from a global payment service provider on sales activity on the days around hurricane Harvey, which hit Houston, Texas, in August 2017. We use a difference-in-differences regression approach to evaluate point-of-sale payments in-store and online in Houston, relative to a comparable unaffected city in Texas. We estimate the overall loss in sales to be equivalent to 3.72 days of average sales and find that online sales mitigate total losses by 1.02 days of average sales. These results are robust to sub-samples of large and small firms, and by industry.

Keywords: Business Performance, Small and Medium Sized Enterprises (SMEs), Digital Payments, Climate

Suggested Citation

Agarwal, Sumit and Fan, Mingxuan and Klapper, Leora F. and Lee, Edward, The Impact of an Extreme Weather Event on Business Performance. Available at SSRN: https://ssrn.com/abstract=3957868

Sumit Agarwal

National University of Singapore (NUS) - Sustainable & Green Finance Institute (SGFIN) ( email )

Singapore

Mingxuan Fan

National University of Singapore (NUS)

1E Kent Ridge Road
NUHS Tower Block Level 7
Singapore, 119228
Singapore

Leora F. Klapper (Contact Author)

World Bank ( email )

1818 H Street, N.W.
Washington, DC 20433
United States
202-473-8738 (Phone)

HOME PAGE: http://econ.worldbank.org/staff/lklapper

World Bank - Development Research Group (DECRG)

1818 H. Street, N.W.
MSN3-311
Washington, DC 20433
United States

Edward Lee

Mastercard Center for Inclusive Growth

United States

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