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How do local banks respond to natural disasters?

Anh Do Orcid Logo, Van Phan Orcid Logo, Duc Tam Nguyen

The European Journal of Finance, Pages: 1 - 26

Swansea University Author: Anh Do Orcid Logo

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DOI (Published version): 10.1080/1351847x.2022.2055969

Abstract

The increasing frequency and intensity of catastrophic natural disasters have the potential to stress and imperil banks to the point of compromised viability or even bankruptcy. Using data of approximately 907 domestic/local banks and Spatial Hazard Events and Losses Database for the United States d...

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Published in: The European Journal of Finance
ISSN: 1351-847X 1466-4364
Published: Informa UK Limited
Online Access: Check full text

URI: https://cronfa.swan.ac.uk/Record/cronfa63212
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spelling 2023-08-01T17:18:40.6335948 v2 63212 2023-04-19 How do local banks respond to natural disasters? a1cf2469f07a784a37b1739eed708f6c 0000-0002-4537-0035 Anh Do Anh Do true false 2023-04-19 CBAE The increasing frequency and intensity of catastrophic natural disasters have the potential to stress and imperil banks to the point of compromised viability or even bankruptcy. Using data of approximately 907 domestic/local banks and Spatial Hazard Events and Losses Database for the United States during the period 2010–2019, we explore how natural disasters impact bank stability. Our main findings support the aforementioned hypothesis that natural disasters decrease bank stability because total deposit and equity (capital) become more volatile and the bank is prone to increased lending margins, as well as a provision of loan loss. Thus, banks lose their competitiveness, ROA deteriorates, and Z-score becomes lower. Strong corporate governance and healthy financial strategy, nevertheless, assist bank recovery in the aftermath of these weather extreme events. Last but not least, we find a non-linear relationship between natural disasters and bank stability and posit the role of indemnity paid out from the Federal insurance programme (after natural hazards) in the high-damage group. Journal Article The European Journal of Finance 1 26 Informa UK Limited 1351-847X 1466-4364 0 0 0 0001-01-01 10.1080/1351847x.2022.2055969 http://dx.doi.org/10.1080/1351847x.2022.2055969 COLLEGE NANME Management School COLLEGE CODE CBAE Swansea University Another institution paid the OA fee 2023-08-01T17:18:40.6335948 2023-04-19T16:07:32.9769975 Faculty of Humanities and Social Sciences School of Management - Business Management Anh Do 0000-0002-4537-0035 1 Van Phan 0000-0002-8776-5422 2 Duc Tam Nguyen 3 63212__27811__15c944c270c04a3b99ccdefd9fd68ddb.pdf 63212.pdf 2023-06-13T10:06:20.0243480 Output 3879616 application/pdf Version of Record true 2022 The Author(s). Published by Informa UK Limited, trading as Taylor & Francis GroupThis is an Open Access article distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. true eng (http://creativecommons.org/licenses/by/4.0/
title How do local banks respond to natural disasters?
spellingShingle How do local banks respond to natural disasters?
Anh Do
title_short How do local banks respond to natural disasters?
title_full How do local banks respond to natural disasters?
title_fullStr How do local banks respond to natural disasters?
title_full_unstemmed How do local banks respond to natural disasters?
title_sort How do local banks respond to natural disasters?
author_id_str_mv a1cf2469f07a784a37b1739eed708f6c
author_id_fullname_str_mv a1cf2469f07a784a37b1739eed708f6c_***_Anh Do
author Anh Do
author2 Anh Do
Van Phan
Duc Tam Nguyen
format Journal article
container_title The European Journal of Finance
container_start_page 1
institution Swansea University
issn 1351-847X
1466-4364
doi_str_mv 10.1080/1351847x.2022.2055969
publisher Informa UK Limited
college_str Faculty of Humanities and Social Sciences
hierarchytype
hierarchy_top_id facultyofhumanitiesandsocialsciences
hierarchy_top_title Faculty of Humanities and Social Sciences
hierarchy_parent_id facultyofhumanitiesandsocialsciences
hierarchy_parent_title Faculty of Humanities and Social Sciences
department_str School of Management - Business Management{{{_:::_}}}Faculty of Humanities and Social Sciences{{{_:::_}}}School of Management - Business Management
url http://dx.doi.org/10.1080/1351847x.2022.2055969
document_store_str 1
active_str 0
description The increasing frequency and intensity of catastrophic natural disasters have the potential to stress and imperil banks to the point of compromised viability or even bankruptcy. Using data of approximately 907 domestic/local banks and Spatial Hazard Events and Losses Database for the United States during the period 2010–2019, we explore how natural disasters impact bank stability. Our main findings support the aforementioned hypothesis that natural disasters decrease bank stability because total deposit and equity (capital) become more volatile and the bank is prone to increased lending margins, as well as a provision of loan loss. Thus, banks lose their competitiveness, ROA deteriorates, and Z-score becomes lower. Strong corporate governance and healthy financial strategy, nevertheless, assist bank recovery in the aftermath of these weather extreme events. Last but not least, we find a non-linear relationship between natural disasters and bank stability and posit the role of indemnity paid out from the Federal insurance programme (after natural hazards) in the high-damage group.
published_date 0001-01-01T08:20:58Z
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score 11.111051

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