Badly hurt? Natural disasters and direct firm effects

Noth, Felix; Rehbein, Oliver

doi:10.1016/j.frl.2018.05.009

Cited by 26 publications

(17 citation statements)

References 30 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…Thereby we can test if firms that reside in affected counties but are connected to banks domiciled in unaffected counties (henceforth: treated firms) borrow more. This angle complements studies on the direct effects of natural catastrophes on firm behavior (Noth and Rehbein, 2018).…”

Section: Introductionmentioning

confidence: 68%

Borrowers under water! Rare disasters, regional banks, and recovery lending

Koetter

Noth

Rehbein

2020

Journal of Financial Intermediation

Self Cite

122

View full text Add to dashboard Cite

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte.We show that local banks provide corporate recovery lending to firms affected by adverse regional macro shocks. Banks that reside in counties unaffected by the natural disaster that we specify as macro shock increase lending to firms inside affected counties by 3%. Firms domiciled in flooded counties, in turn, increase corporate borrowing by 16% if they are connected to banks in unaffected counties. We find no indication that recovery lending entails excessive risk-taking or rent-seeking. However, within the group of shock-exposed banks, those without access to geographically more diversified interbank markets exhibit more credit risk and less equity capital. Abstract * We are indebted to two anonymous referees, the co-editors, and the managing editor, Murillo Campello, for very clear and constructive feedback. Furthermore, we thank for valuable comments and suggestions. We are grateful for feedback from participants at the PhD seminar series at the IWH, the 9th RGS Conference, the 31st EEA meetings, the 23rd German Finance Association meeting, the 6th Workshop on Banks and Financial Markets in Vienna, the 2017 IBEFA-ASSA meetings, the 66th MFA meetings, and the 12th FIRS conference. Support from the German Association of Insurances in terms of claim rates data due to natural disasters is highly appreciated. The opinions expressed in this paper are those of the authors and do not necessarily reflect those of any of the associated institutions. All errors are our own.

show abstract

Section: Introductionmentioning

confidence: 68%

Borrowers under water! Rare disasters, regional banks, and recovery lending

Koetter

Noth

Rehbein

2020

Journal of Financial Intermediation

Self Cite

122

View full text Add to dashboard Cite

show abstract

“…However, the relationship between flooding and firm performance is far from conclusive. On the one hand, Leiter et al, among others, find evidence that companies located in regions of floods could benefit from flooding [28][29][30]. One of the potential reasons is that, although natural disasters may physically affect the factors of production such as labor and capital, it is possible for firms to experience a higher growth of assets if lost capital is replaced and new technologies are adopted.…”

Section: Economic Impacts Of Natural Disastersmentioning

confidence: 99%

Multi-Scale Assessment of the Economic Impacts of Flooding: Evidence from Firm to Macro-Level Analysis in the Chinese Manufacturing Sector

Pant

Hall

et al. 2019

Sustainability

View full text Add to dashboard Cite

We present an empirical study to systemically estimate flooding impacts, linking across scales from individual firms through to the macro levels in China. To this end, we combine a detailed firm-level econometric analysis of 399,356 firms with a macroeconomic input-output model to estimate flood impacts on China’s manufacturing sector over the period 2003–2010. We find that large flooding events on average reduce firm outputs (measured by labor productivity) by about 28.3% per year. Using an input-output analysis, we estimate the potential macroeconomic impact to be a 12.3% annual loss in total output, which amounts to 15,416 RMB billion. Impacts can propagate from manufacturing firms, which are the focus of our empirical analysis, through to other economic sectors that may not actually be located in floodplains but can still be affected by economic disruptions. Lagged flood effects over the following two years are estimated to be a further 5.4% at the firm level and their associated potential effects are at a 2.3% loss in total output or 2,486 RMB billion at the macro-level. These results indicate that the scale of economic impacts from flooding is much larger than microanalyses of direct damage indicate, thus justifying greater action, at a policy level and by individual firms, to manage flood risk.

show abstract

“…Using the method of Noth and Rehbein (2019) , we conduct regression analyses to examine the effects of the two events on the industry portfolio returns around the event dates. Each sample period is from −255 to +60 days around the announcement date of the respective QE policy following each event.…”

Section: Resultsmentioning

confidence: 99%

Global financial crisis and COVID-19: Industrial reactions

Chen

Yeh

2021

Finance Research Letters

102

View full text Add to dashboard Cite

We study industrial reactions to both the global financial crisis of 2008 and the COVID-19 pandemic. Although most industries in the U.S. suffered from the two events, the stock performance of most industries started to recover following the announcements of quantitative easing. Our results indicate that quantitative easing is effective in boosting investor confidence. We also find that the effect of quantitative easing in 2020 on stock performance is more significant for the industries that are more affected by the pandemic.

show abstract

Badly hurt? Natural disasters and direct firm effects

Cited by 26 publications

References 30 publications

Borrowers under water! Rare disasters, regional banks, and recovery lending

Borrowers under water! Rare disasters, regional banks, and recovery lending

Multi-Scale Assessment of the Economic Impacts of Flooding: Evidence from Firm to Macro-Level Analysis in the Chinese Manufacturing Sector

Global financial crisis and COVID-19: Industrial reactions

Contact Info

Product

Resources

About