Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/191676
Authors: 
Koetter, Michael
Noth, Felix
Rehbein, Oliver
Year of Publication: 
2019
Series/Report no.: 
IWH Discussion Papers 31/2016
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.
Subjects: 
disaster risk
credit demand
natural disaster
relationship lenders
JEL: 
G21
G29
O16
Q54
Document Type: 
Working Paper
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