Rehbein, Oliver; Ongena, Steven - In: Journal of financial and quantitative analysis : JFQA 57 (2022) 7, pp. 2627-2658
This article demonstrates that low bank capital carries a negative externality because it amplifies local shock spillovers. We exploit a natural disaster that is transmitted to firms in nondisaster areas via their banks. Firms connected to a strongly disaster-exposed bank with lowest-quartile...