We examine how banks respond to large natural disasters when corporate borrowers are located in the neighborhood of the disaster area. We find robust evidence that banks charge significantly higher loan spreads for firms located in the neighborhood of the disaster area than for remote firms. The...

Climate change and environmental risks are increasingly recognized as a concern for financial authorities, yet empirical evidence of the damage for bank balance sheets is relatively scant. This paper provides preliminary estimates of the aggregate impact of physical risks from climate and...

Climate change and environmental risks are increasingly recognized as a concern for financial authorities, yet empirical evidence of the damage for bank balance sheets is relatively scant. This paper provides preliminary estimates of the aggregate impact of physical risks from climate and...

This paper explores how banks adjust their risk-based capital ratios and asset allocations following an exogenous shock to their asset quality caused by Hurricane Katrina in 2005. We find that independent banks based in the disaster areas increase their risk-based capital ratios after the...

Not very. We find that weather disasters over the last quarter century had insignificant or small effects on U.S. banks' performance. This stability seems endogenous rather than a mere reflection of federal aid. Disasters increase loan demand, which offsets losses and actually boosts profits at...