Work

Natural Disasters and Economic Growth: The Role of Banking Market Structure

Year: 2021

Type: article

Abstract: Following a natural disaster, the rate of economic growth recovers faster in less competitivebanking markets. A 10% reduction in competition increases the rate of economicgrowth by 0.3%. In less competitive markets, banks respond to a disaster by increasingthe supply of real estate credit by refinancing mortgage loans but do not lend more tobusinesses or consumers. Instead, government agencies provide disaster loans to affectedbusinesses and households. Smaller, profitable and well-capitalized institutionsthat rely more on traditional retail banking originate most mortgage credit.

Source: Journal of Corporate Finance

DOI: 10.1016/j.jcorpfin.2021.102101

Authors: Andi Duqi, Danny McGowan, Enrico Onali, Giuseppe Torluccio

Institutions: University of Bologna, University of Birmingham, University of Exeter

Language: English

Topic: Banking stability, regulation, efficiency

Subfield: Finance

Field: Economics, Econometrics and Finance

Domain: Social Sciences

SDG: Decent work and economic growth

Open Access status: hybrid

Estimated APC paid: $3,140