The impact of natural disasters on the banking sector: Evidence from hurricane strikes in the Caribbean

Archive ouverte : Article de revue

Brei, Michael | Mohan, Preeya | Strobl, Eric

Edité par HAL CCSD ; Elsevier

International audience. While natural disasters cause considerable damage and a number of studies have attempted to investigate the nature and quantify the magnitude of these losses, there is a paucity of empirical evidence on the impact on the banking sector. In this paper we construct a panel of quarterly banking data and historical losses due to hurricane strikes for islands in the Eastern Caribbean to econometrically investigate the impact of these natural disasters on the banking industry. Our results suggest that, following a hurricane strike, banks face deposit withdrawals and experience a negative funding shock to which they respond by reducing the supply of lending and by drawing on liquid assets. There are no signs of deterioration in loan defaults and bank capital. Therefore, the withdrawal and use of deposits rather than an expansion in credit appears to play a significant role in funding post hurricane recovery in the region. This points to the importance of an active reserve requirement policy.

Consulter en ligne

Suggestions

Du même auteur

Protecting Species through Legislation: The Case of Sea Turtles

Archive ouverte: Article de revue

Brei, Michael | 2020-01-23

International audience. We evaluate the effectiveness of legislation in reducing the negative impacts of beachfront lighting on sea turtle nesting activity, one of the main threats to the species. To this end we con...

Credibility, Reputation and De-Risking in Global Banking: Evidence from a T...

Archive ouverte: Article de revue

Brei, Michael | 2020-02-19

International audience. This paper investigates the de-risking phenomenon from the perspective of an international bank’s decision to de-risk in a foreign market, where there is asymmetric information and costly mon...

Bank intermediation activity in a low‐interest‐rate environment

Archive ouverte: Article de revue

Brei, Michael | 2020-07

International audience. This paper investigates how a prolonged period of low‐interest rates affects bank intermediation activity. We use data for 113 large international banks headquartered in 14 major advanced eco...

Du même sujet

« Conciliation vie privée vie professionnelle » : plusieurs termes pour une...

Archive ouverte: Article de revue

Verstaevel, N. | 2020-12-31

The role of the leverage effect in the price discovery process of credit ma...

Archive ouverte: Article de revue

Zimmermann, Paul | 2021-01-31

Combating climate change and controlling energy demand: introduction to the...

Archive ouverte: Article de revue

Aubrée, Loïc | 2017-07-28

International audience

New indices to characterize drawing behavior in humans (Homo sapiens) and c...

Archive ouverte: Article de revue

Martinet, Lison | 2021

International audience

Uncovering the dark side of gamification at work: Impacts on engagement and...

Archive ouverte: Article de revue

Hammedi, Wafa | 2021-01-31

Liquidity events and VC-backed academic spin-offs: The role of search allia...

Archive ouverte: Article de revue

Bruneel, Johan | 2020-12-31

International audience

Chargement des enrichissements...