Borrowers under water! : rare disasters, regional banks, and recovery lending / Michael Koetter, Felix Noth, Oliver Rehbein
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Borrowers under water!
Discovery
1047648482
URN
urn:nbn:de:gbv:3:2-104366
DOI
ISBN
ISSN
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Skalierung
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Publication history
Halle (Saale), Germany : Halle Institute for Economic Research (IWH), January 29, 2019
Content
1 Online-Ressource (III, 31 Seiten, 3,96 MB) : Illustrationen
Edition
This draft: January 29, 2019
Language
eng
Comment
Abstract
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.
Series
IWH-Diskussionspapiere ; 2016, no. 31 (November 2016) [rev.] ppn:837399270