1. Publications
  2. IWH Discussion Papers, 4/2018
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Flooded Through the Back Door: Firm-level Effects of Banks‘ Lending Shifts

I show that natural disasters transmit to firms in non-disaster areas via their banks. This spillover of non-financial shocks through the banking system is stronger for banks with less regulatory capital. Firms connected to a disaster-exposed bank with below median capital reduce their employment by 11% and their fixed assets by 20% compared to firms in the same region without such a bank during the 2013 flooding in Germany. Relationship banking and higher firm capital also mitigate the effects of such negative cross-regional spillovers.

09. February 2018

Authors Oliver Rehbein

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Keywords

natural disasters real effects shock transmission bank capital

JEL Classification

E24 E44 G21 G29

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Oliver Rehbein
Oliver Rehbein
Economist

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Dr Wolfgang Sender
Dr Wolfgang Sender
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