Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/284664 
Year of Publication: 
2023
Series/Report no.: 
Economics Working Paper Series No. 2023/02
Publisher: 
Auckland University of Technology (AUT), Faculty of Business, Economics and Law, Auckland
Abstract: 
How does small-firm employment respond to exogenous labor productivity risk? We find that this depends on the capitalization of firms' local banks. The evidence comes from firms employing workers whose productivity depends on the weather. Weatherinduced labor productivity risk reduces this employment, and this effect is stronger in regions where the regional banks have less equity capital. Bank capitalization also proxies for the extent to which the regional banks' borrowers can obtain liquidity when the regions are hit by weather shocks. We argue that, as liquidity providers, wellcapitalized banks support economic adaptation to climate change
Document Type: 
Working Paper

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