Local Finance and Economic Resilience During Extreme Weather Events

58 Pages Posted: 25 Jun 2024

See all articles by Vinzenz Peters

Vinzenz Peters

Maastricht University, School of Business and Economics

W. Scott Langford

School of Public Affairs - Arizona State University

Mark Sanders

Maastricht University

Maryann P. Feldman

Arizona State University (ASU)

Date Written: February 19, 2024

Abstract

The economic costs incurred by extreme weather events are substantial and increasing. In this study, we demonstrate how community banks - a type of financial institution with strong local ties and customer relationships - mitigate these costs at the local level. We use an event study model to demonstrate that US counties with higher community bank market shares experience fewer employment losses through extreme weather events. We then use bank-level analyses to demonstrate the mechanism - the small business credit supply. Community banks maintain their lending following extreme weather events, while other banks reduce it. These findings provide novel evidence on how local financial institutions strengthen economic resilience through extreme weather events. As policymakers develop strategies to mitigate the effects of extreme weather events, local finance may be a solution.

Keywords: Environmental Economics, Economic Resilience, Financial Institutions G21

JEL Classification: O12, R11, Q54

Suggested Citation

Peters, Vinzenz and Langford, W. Scott and Sanders, Mark and Feldman, Maryann P., Local Finance and Economic Resilience During Extreme Weather Events (February 19, 2024). Available at SSRN: https://ssrn.com/abstract=4868821 or http://dx.doi.org/10.2139/ssrn.4868821

Vinzenz Peters (Contact Author)

Maastricht University, School of Business and Economics ( email )

Netherlands

W. Scott Langford

School of Public Affairs - Arizona State University ( email )

411 N Central Ave #750
Phoenix, AZ 85004
United States
2527176016 (Phone)

HOME PAGE: http://www.scottlangford.us/

Mark Sanders

Maastricht University ( email )

P.O. Box 616
Maastricht, Limburg 6200MD
Netherlands

Maryann P. Feldman

Arizona State University (ASU) ( email )

Farmer Building 440G PO Box 872011
Tempe, AZ 85287
United States

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