Staff Reports
How Bad Are Weather Disasters for Banks?
Number 990
November 2021 January 2022

JEL classification: G21, H84

Authors: Kristian S. Blickle, Sarah N. Hamerling, and Donald P. Morgan

Not very. We find that FEMA 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 larger banks. Local banks tend to avoid mortgage lending where floods are more common than official flood maps would predict, suggesting that local knowledge may also mitigate disaster impacts.

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Author Disclosure Statement(s)
Kristian Blickle
The author declares that he has no relevant or material financial interests that relate to the research described in this paper.

Sarah N. Hamerling
The author declare that she has no relevant or material financial interests that relate to the research described in this paper.

Donald Morgan
The authors declare that they have no relevant or material financial interests that relate to the research described in this paper.
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