How Bad Are Weather Disasters for Banks? - FEDERAL RESERVE BANK of NEW YORK

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Staff Reports

How Bad Are Weather Disasters for Banks?

Number 990
November 2021 Revised October 2025

JEL classification: G21, G01, Q54

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

Not very. We find even the most destructive weather disasters over the last quarter century had only modest effects on U.S. banks’ performance. This stability seems endogenous rather than a mere reflection of federal disaster aid, as disasters tend to increase loan demand which helps offset losses and boosts profits. Local banks avoid mortgage lending where floods are more common than official flood maps would predict, suggesting local knowledge may also mitigate disaster impacts. Our findings inform ongoing assessments of the physical risks to banks from climate change.

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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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